Item 1. Financial Statements

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Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended June 30				Six Months Ended June 30
(in millions, except per share amounts)	2026		2025		2026		2025
Sales and service revenues
Product sales	$	2,271	$	1,957	$	4,275	$	3,670
Service revenues	1,147		1,125		2,242		2,146
Sales and service revenues	3,418		3,082		6,517		5,816
Cost of sales and service revenues
Cost of product sales	1,985		1,696		3,726		3,147
Cost of service revenues	1,002		991		1,952		1,880
Income from operating investments, net	21		8		26		21
Other income and gains, net	—		1		—		1
General and administrative expenses	242		241		500		487

Operating income	210		163		365		324
Other income (expense)
Interest expense	(27)		(28)		(49)		(56)
Non-operating retirement benefit	53		47		106		95
Other, net	18		6		20		12
Earnings before income taxes	254		188		442		375
Federal and foreign income tax expense	46		36		85		74
Net earnings	$	208	$	152	$	357	$	301

Basic earnings per share	$	5.27	$	3.86	$	9.06	$	7.66
Weighted-average common shares outstanding	39.5		39.4		39.4		39.3

Diluted earnings per share	$	5.27	$	3.86	$	9.06	$	7.66
Weighted-average diluted shares outstanding	39.5		39.4		39.4		39.3

Dividends declared per share	$	1.38	$	1.35	$	2.76	$	2.70

Net earnings from above	$	208	$	152	$	357	$	301
Other comprehensive income
Change in unamortized benefit plan costs	2		1		4		2

Tax expense for items of other comprehensive income	—		—		(1)		—
Other comprehensive income, net of tax	2		1		3		2
Comprehensive income	$	210	$	153	$	360	$	303

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

HUNTINGTON INGALLS INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)


($ in millions)	June 30, 2026		December 31, 2025
Assets
Current Assets
Cash and cash equivalents	$	12	$	774
Accounts receivable, net of allowance for expected credit losses of $3 million as of 2026 and $2 million as of 2025	452		339
Contract assets	2,154		1,758
Inventoried costs	236		219
Income taxes receivable	279		284

Prepaid expenses and other current assets	106		77
Total current assets	3,239		3,451
Property, plant, and equipment, net of accumulated depreciation of $2,849 million as of 2026 and $2,754 million as of 2025	3,806		3,726
Operating lease assets	282		267
Goodwill	2,650		2,650
Other intangible assets, net of accumulated amortization of $1,265 million as of 2026 and $1,222 million as of 2025	651		694
Pension plan assets	1,627		1,544

Miscellaneous other assets	427		417
Total assets	$	12,682	$	12,749
Liabilities and Stockholders' Equity
Current Liabilities
Trade accounts payable	$	737	$	556
Accrued employees’ compensation	386		443

Current portion of postretirement plan liabilities	119		119
Current portion of workers’ compensation liabilities	220		217
Contract liabilities	690		1,220


Other current liabilities	481		490
Total current liabilities	2,633		3,045
Long-term debt	2,702		2,700
Pension plan liabilities	155		155
Other postretirement plan liabilities	189		200
Workers’ compensation liabilities	450		442
Long-term operating lease liabilities	233		223
Deferred tax liabilities	662		572
Other long-term liabilities	346		339
Total liabilities	7,370		7,676
Commitments and Contingencies (Note 10)
Stockholders’ Equity
Common stock, $0.01 par value; 150,000,000 shares authorized; 53,988,912 shares issued and 39,404,203 shares outstanding as of 2026, and 53,826,236 shares issued and 39,241,527 shares outstanding as of 2025	1		1
Additional paid-in capital	2,080		2,087
Retained earnings	5,730		5,487
Treasury stock	(2,449)		(2,449)
Accumulated other comprehensive loss	(50)		(53)
Total stockholders’ equity	5,312		5,073
Total liabilities and stockholders’ equity	$	12,682	$	12,749

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

HUNTINGTON INGALLS INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Six Months Ended June 30
($ in millions)	2026		2025
Operating Activities:
Net earnings	$	357	$	301
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation	112		110
Amortization of purchased intangibles	43		52
Stock-based compensation	31		33

Deferred income taxes	89		(19)




Gain on investments in marketable securities	(19)		(10)

Other non-cash transactions, net	12		9
Change in
Accounts receivable	(113)		(165)
Contract assets	(396)		(128)
Inventoried costs	(17)		(7)
Prepaid expenses and other assets	(17)		57
Accounts payable and accruals	(413)		272
Retiree benefits	(90)		(77)
Net cash provided by (used in) operating activities	(421)		428
Investing Activities:
Capital expenditures
Capital expenditure additions	(193)		(163)
Grant proceeds for capital expenditures	3		3



Acquisitions of businesses	—		(133)

Other investing activities, net	1		2
Net cash used in investing activities	(189)		(291)
Financing Activities:

Repayment of long-term debt	—		(500)
Proceeds from line of credit borrowings	17		—
Repayment of line of credit borrowings	(17)		—



Dividends paid	(109)		(106)


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

Other financing activities, net	—		(5)
Net cash used in financing activities	(152)		(625)
Change in cash and cash equivalents	(762)		(488)
Cash and cash equivalents, beginning of period	774		831
Cash and cash equivalents, end of period	$	12	$	343
Supplemental Cash Flow Disclosure
Cash paid for income taxes (net of refunds)	$	12	$	55
Cash paid for interest	$	59	$	42
Non-Cash Investing and Financing Activities
Capital expenditures accrued in accounts payable	$	14	$	6

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

HUNTINGTON INGALLS INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)


Three Months Ended June 30, 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 March 31, 2025	$	1	$	2,057	$	5,191	$	(2,449)	$	(27)	$	4,773
Net earnings	—		—		152		—		—		152
Dividends declared ($1.35 per share)	—		—		(53)		—		—		(53)
Stock-based compensation	—		9		—		—		—		9
Other comprehensive income, net of tax	—		—		—		—		1		1


Balance as of June 30, 2025	$	1	$	2,066	$	5,290	$	(2,449)	$	(26)	$	4,882

Balance as of March 31, 2026	$	1	$	2,070	$	5,577	$	(2,449)	$	(52)	$	5,147
Net earnings	—		—		208		—		—		208
Dividends declared ($1.38 per share)	—		—		(55)		—		—		(55)
Stock-based compensation	—		10		—		—		—		10
Other comprehensive income, net of tax	—		—		—		—		2		2


Balance as of June 30, 2026	$	1	$	2,080	$	5,730	$	(2,449)	$	(50)	$	5,312

Six Months Ended June 30, 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
Net earnings	—		—		301		—		—		301
Dividends declared ($2.70 per share)	—		—		(106)		—		—		(106)
Stock-based compensation	—		21		(2)		—		—		19
Other comprehensive income, net of tax	—		—		—		—		2		2


Balance as of June 30, 2025	$	1	$	2,066	$	5,290	$	(2,449)	$	(26)	$	4,882

Balance as of December 31, 2025	$	1	$	2,087	$	5,487	$	(2,449)	$	(53)	$	5,073
Net earnings	—		—		357		—		—		357
Dividends declared ($2.76 per share)	—		—		(109)		—		—		(109)
Stock-based compensation	—		(7)		(5)		—		—		(12)
Other comprehensive income, net of tax	—		—		—		—		3		3


Balance as of June 30, 2026	$	1	$	2,080	$	5,730	$	(2,449)	$	(50)	$	5,312

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

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. 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").

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 $263 million and $249 million as of June 30, 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 values of the Company's total long-term debt as of June 30, 2026 and December 31, 2025 were $2,699 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.

3. ACCOUNTING STANDARDS UPDATES

Recently Adopted Guidance

There were no new Accounting Standards Updates (“ASU”) adopted during the six months ended June 30, 2026 that had a material impact on the Company’s consolidated financial statements.

Accounting Guidance Issued But Not Adopted as of June 30, 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): 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.

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.

4. 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 each of the six months ended June 30, 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 $109 million and $106 million for the six months ended June 30, 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 $50 million and $53 million as of June 30, 2026, and December 31, 2025, respectively.

The changes in accumulated other comprehensive loss by component for the three and six months ended June 30, 2026 and 2025, were as follows:


($ in millions)	Benefit Plans		Total
Balance as of March 31, 2025	$	(27)	$	(27)

Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost⁽¹⁾	4		4
Amortization of net actuarial gain⁽¹⁾	(3)		(3)



Net current period other comprehensive income	1		1
Balance as of June 30, 2025	$	(26)	$	(26)

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

Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost⁽¹⁾	4		4
Amortization of net actuarial gain⁽¹⁾	(2)		(2)



Net current period other comprehensive income	2		2
Balance as of June 30, 2026	$	(50)	$	(50)


($ in millions)	Benefit Plans		Total
Balance as of December 31, 2024	$	(28)	$	(28)

Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost⁽¹⁾	8		8
Amortization of net actuarial gain⁽¹⁾	(6)		(6)



Net current period other comprehensive income	2		2
Balance as of June 30, 2025	$	(26)	$	(26)

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

Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost⁽¹⁾	8		8
Amortization of net actuarial gain⁽¹⁾	(4)		(4)


Tax expense for items of other comprehensive income	(1)		(1)
Net current period other comprehensive income	3		3
Balance as of June 30, 2026	$	(50)	$	(50)

(1) These accumulated comprehensive loss components are included in the computation of net periodic benefit cost. See Note 11: Employee Pension and Other Postretirement Benefits. The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for each of the three months ended June 30, 2026 and 2025 was less than $1 million. The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for the six months ended June 30, 2026 and 2025 was $1 million and less than $1 million, respectively.

5. EARNINGS PER SHARE

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


	Three Months Ended June 30				Six Months Ended June 30
(in millions, except per share amounts)	2026		2025		2026		2025
Net earnings	$	208	$	152	$	357	$	301

Weighted-average common shares outstanding	39.5		39.4		39.4		39.3
Net dilutive effect of stock awards	—		—		—		—


Dilutive weighted-average common shares outstanding	39.5		39.4		39.4		39.3

Earnings per share - basic	$	5.27	$	3.86	$	9.06	$	7.66
Earnings per share - diluted	$	5.27	$	3.86	$	9.06	$	7.66

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 each of the three and six months ended June 30, 2026 and 2025, respectively. The Company has also excluded the effects of 0.1 million Restricted Stock Rights ("RSRs") for each of the three and six months ended June 30, 2026, and 0.1 million and 0.2 million RSRs for the three and six months ended June 30, 2025, respectively.

6. REVENUE

Disaggregation of Revenue

The following tables present revenues on a disaggregated basis:


	Three Months Ended June 30, 2026
($ in millions)	Ingalls		Newport News		Mission Technologies		Intersegment Eliminations		Total
Revenue Type
Product sales	$	721	$	1,520	$	30	$	—	$	2,271
Service revenues	122		329		696		—		1,147
Intersegment	2		—		34		(36)		—
Sales and service revenues	$	845	$	1,849	$	760	$	(36)	$	3,418
Customer Type
Federal	$	843	$	1,849	$	721	$	—	$	3,413
Commercial	—		—		5		—		5

Intersegment	2		—		34		(36)		—
Sales and service revenues	$	845	$	1,849	$	760	$	(36)	$	3,418
Contract Type
Firm fixed-price	$	13	$	2	$	108	$	—	$	123
Fixed-price incentive	709		844		1		—		1,554
Cost-type	121		1,003		585		—		1,709
Time and materials	—		—		32		—		32
Intersegment	2		—		34		(36)		—
Sales and service revenues	$	845	$	1,849	$	760	$	(36)	$	3,418


	Three Months Ended June 30, 2025
($ in millions)	Ingalls		Newport News		Mission Technologies		Intersegment Eliminations		Total
Revenue Type
Product sales	$	610	$	1,319	$	28	$	—	$	1,957
Service revenues	111		283		731		—		1,125
Intersegment	3		1		32		(36)		—
Sales and service revenues	$	724	$	1,603	$	791	$	(36)	$	3,082
Customer Type
Federal	$	721	$	1,601	$	756	$	—	$	3,078
Commercial	—		1		2		—		3
State and local government agencies	—		—		1		—		1
Intersegment	3		1		32		(36)		—
Sales and service revenues	$	724	$	1,603	$	791	$	(36)	$	3,082
Contract Type
Firm fixed-price	$	5	$	2	$	104	$	—	$	111
Fixed-price incentive	605		808		1		—		1,414
Cost-type	111		792		619		—		1,522
Time and materials	—		—		35		—		35
Intersegment	3		1		32		(36)		—
Sales and service revenues	$	724	$	1,603	$	791	$	(36)	$	3,082


	Six Months Ended June 30, 2026
($ in millions)	Ingalls		Newport News		Mission Technologies		Intersegment Eliminations		Total
Revenue Type
Product sales	$	1,335	$	2,884	$	56	$	—	$	4,275
Service revenues	230		630		1,382		—		2,242
Intersegment	5		—		70		(75)		—
Sales and service revenues	$	1,570	$	3,514	$	1,508	$	(75)	$	6,517
Customer Type
Federal	$	1,565	$	3,514	$	1,430	$	—	$	6,509
Commercial	—		—		8		—		8

Intersegment	5		—		70		(75)		—
Sales and service revenues	$	1,570	$	3,514	$	1,508	$	(75)	$	6,517
Contract Type
Firm fixed-price	$	14	$	2	$	211	$	—	$	227
Fixed-price incentive	1,322		1,588		1		—		2,911
Cost-type	229		1,924		1,166		—		3,319
Time and materials	—		—		60		—		60
Intersegment	5		—		70		(75)		—
Sales and service revenues	$	1,570	$	3,514	$	1,508	$	(75)	$	6,517


	Six Months Ended June 30, 2025
($ in millions)	Ingalls		Newport News		Mission Technologies		Intersegment Eliminations		Total
Revenue Type
Product sales	$	1,136	$	2,479	$	55	$	—	$	3,670
Service revenues	218		519		1,409		—		2,146
Intersegment	7		1		62		(70)		—
Sales and service revenues	$	1,361	$	2,999	$	1,526	$	(70)	$	5,816
Customer Type
Federal	$	1,354	$	2,997	$	1,457	$	—	$	5,808
Commercial	—		1		6		—		7
State and local government agencies	—		—		1		—		1
Intersegment	7		1		62		(70)		—
Sales and service revenues	$	1,361	$	2,999	$	1,526	$	(70)	$	5,816
Contract Type
Firm fixed-price	$	5	$	4	$	201	$	—	$	210
Fixed-price incentive	1,131		1,574		3		—		2,708
Cost-type	218		1,419		1,188		—		2,825
Time and materials	—		1		72		—		73
Intersegment	7		1		62		(70)		—
Sales and service revenues	$	1,361	$	2,999	$	1,526	$	(70)	$	5,816


	Three Months Ended June 30				Six Months Ended June 30
($ in millions)	2026		2025		2026		2025
Major Programs
Amphibious assault ships	$	447	$	324	$	792	$	656
Surface combatants and coast guard cutters	394		397		771		696
Other	4		3		7		9
Total Ingalls	845		724		1,570		1,361
Aircraft carriers	976		794		1,857		1,552
Submarines	705		663		1,327		1,179
Other	168		146		330		268
Total Newport News	1,849		1,603		3,514		2,999
All-domain operations and warfare systems	518		529		1,010		1,014
Global security, unmanned systems, and other	242		262		498		512
Total Mission Technologies	760		791		1,508		1,526
Intersegment eliminations	(36)		(36)		(75)		(70)
Sales and service revenues	$	3,418	$	3,082	$	6,517	$	5,816

As of June 30, 2026, the Company had $57.3 billion of remaining performance obligations. The Company expects to recognize approximately 35% of its remaining performance obligations as revenue through 2027, an additional 35% through 2029, and the balance thereafter.

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 June 30				Six Months Ended June 30
($ in millions, except per share amounts)	2026		2025		2026		2025
Effect on operating income(1)	$	10	$	(10)	$	11	$	(10)
Effect on diluted earnings per share (net of tax)	$	0.20	$	(0.20)	$	0.22	$	(0.20)

(1) For each of the three and six months ended June 30, 2026 and 2025, 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 June 30, 2026, cumulative catch-up revenue adjustments included a favorable adjustment of $28 million on the refueling and complex overhaul ("RCOH") of USS John C. Stennis (CVN 74) at the Company's Newport News segment.

For the three months ended June 30, 2026, cumulative catch-up revenue adjustments included an unfavorable adjustment of $48 million on the RCOH of USS George Washington (CVN 73) at the Company's Newport News segment.

For the six months ended June 30, 2026, 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 six months ended June 30, 2026, cumulative catch-up revenue adjustments included an unfavorable adjustment of $48 million on the RCOH of USS George Washington (CVN 73) at the Company's Newport News segment.

For the three months ended June 30, 2025, cumulative catch-up revenue adjustments included a favorable adjustment of $32 million on the Arleigh Burke class (DDG 51) multi-year construction contract awarded in 2018 at the Company's Ingalls segment.

For the three months ended June 30, 2025, cumulative catch-up revenue adjustments included unfavorable adjustments of $42 million on the Enterprise (CVN 80) and Doris Miller (CVN 81) construction contract at the Company's Newport News segment and $20 million on the Bougainville (LHA 8) construction contract at the Company's Ingalls segment.

For the six months ended June 30, 2025, cumulative catch-up revenue adjustments included a favorable adjustment of $33 million on the Arleigh Burke class (DDG 51) multi-year construction contract awarded in 2018 at the Company's Ingalls segment.

For the six months ended June 30, 2025, cumulative catch-up revenue adjustments included an unfavorable adjustment of $43 million on the Enterprise (CVN 80) and Doris Miller (CVN 81) construction contract at the Company's Newport News segment.

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)	June 30, 2026		December 31, 2025
Contract assets	$	2,154	$	1,758
Contract liabilities	690		1,220
Net contract assets	$	1,464	$	538

The Company’s net contract assets increased $926 million from December 31, 2025 to June 30, 2026, primarily as a result of the timing of billings across programs on certain U.S. Navy contracts. For the three and six months ended June 30, 2026, the Company recognized revenue of $197 million and $955 million, respectively, related to its contract liabilities as of December 31, 2025. For the three and six months ended June 30, 2025, the Company

recognized revenue of $52 million and $604 million, respectively, related to its contract liabilities as of December 31, 2024.

7. SEGMENT INFORMATION

The following tables present the Company's operating results by segment:


	Three Months Ended June 30, 2026
($ in millions)	Ingalls		Newport News		Mission Technologies		Intersegment Eliminations		Total
Sales and Service Revenues
Product sales	$	721	$	1,520	$	30	$	—	$	2,271
Service revenues	122		329		696		—		1,147
Intersegment	2		—		34		(36)		—
Total sales and service revenues	845		1,849		760		(36)		3,418
Segment Operating Income
Income from operating investments, net	—		—		21		—		21

Less:
Cost of sales and service revenues
Product	631		1,327		20		—		1,978
Service	111		275		615		—		1,001
Intersegment	2		—		34		(36)		—
Other segment items	43		136		57		—		236
Total segment operating income	$	58	$	111	$	55	$	—	224
Non-segment factors affecting operating income
Operating FAS/CAS Adjustment									(8)
Non-current state income taxes									(6)
Total operating income									$	210


	Three Months Ended June 30, 2025
($ in millions)	Ingalls		Newport News		Mission Technologies		Intersegment Eliminations		Total
Sales and Service Revenues
Product sales	$	610	$	1,319	$	28	$	—	$	1,957
Service revenues	111		283		731		—		1,125
Intersegment	3		1		32		(36)		—
Total sales and service revenues	724		1,603		791		(36)		3,082
Segment Operating Income
Income from operating investments, net	—		—		8		—		8

Less:
Cost of sales and service revenues
Product	526		1,145		20		—		1,691
Service	100		234		656		—		990
Intersegment	3		1		32		(36)		—
Other segment items	41		141		55		—		237
Total segment operating income	$	54	$	82	$	36	$	—	172
Non-segment factors affecting operating income
Operating FAS/CAS Adjustment									(6)
Non-current state income taxes									(3)
Total operating income									$	163


	Six Months Ended June 30, 2026
($ in millions)	Ingalls		Newport News		Mission Technologies		Intersegment Eliminations		Total
Sales and Service Revenues
Product sales	$	1,335	$	2,884	$	56	$	—	$	4,275
Service revenues	230		630		1,382		—		2,242
Intersegment	5		—		70		(75)		—
Total sales and service revenues	1,570		3,514		1,508		(75)		6,517
Segment Operating Income
Income from operating investments, net	—		—		26		—		26

Less:
Cost of sales and service revenues
Product	1,162		2,506		44		—		3,712
Service	207		530		1,212		—		1,949
Intersegment	5		—		70		(75)		—
Other segment items	89		279		118		—		486
Total segment operating income	$	107	$	199	$	90	$	—	396
Non-segment factors affecting operating income
Operating FAS/CAS Adjustment									(17)
Non-current state income taxes									(14)
Total operating income									$	365


	Six Months Ended June 30, 2025
($ in millions)	Ingalls		Newport News		Mission Technologies		Intersegment Eliminations		Total
Sales and Service Revenues
Product sales	$	1,136	$	2,479	$	55	$	—	$	3,670
Service revenues	218		519		1,409		—		2,146
Intersegment	7		1		62		(70)		—
Total sales and service revenues	1,361		2,999		1,526		(70)		5,816
Segment Operating Income
Income from operating investments, net	—		—		21		—		21

Less:
Cost of sales and service revenues
Product	978		2,116		40		—		3,134
Service	190		427		1,260		—		1,877
Intersegment	7		1		62		(70)		—
Other segment items	86		288		109		—		483
Total segment operating income	$	100	$	167	$	76	$	—	343
Non-segment factors affecting operating income
Operating FAS/CAS Adjustment									(16)
Non-current state income taxes									(3)
Total operating income									$	324

Sales transactions between segments are generally recorded at cost.

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

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 June 30				Six Months Ended June 30
($ in millions)	2026		2025		2026		2025
Capital Expenditures(1)
Ingalls	$	16	$	16	$	26	$	30
Newport News	90		74		147		123
Mission Technologies	10		1		13		2
Total segment capital expenditures	116		91		186		155
Corporate	3		2		4		5
Total capital expenditures	$	119	$	93	$	190	$	160

(1) Net of grant proceeds for capital expenditures


	Three Months Ended June 30				Six Months Ended June 30
($ in millions)	2026		2025		2026		2025
Depreciation and Amortization
Ingalls	$	20	$	20	$	40	$	40
Newport News	36		36		71		69
Mission Technologies	21		26		41		51
Total segment depreciation and amortization	77		82		152		160
Corporate	2		1		3		2
Total depreciation and amortization	$	79	$	83	$	155	$	162

Asset information by segment is not disclosed because it is not a key measure of performance used by the chief operating decision maker.

8. INCOME TAXES

The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended June 30, 2026 and 2025, were 18.1% and 19.1%, respectively. For the six months ended June 30, 2026 and 2025, the Company's effective income tax rates on earnings from operations were 19.2% and 19.7%, respectively. The lower effective tax rates for the three and six months ended June 30, 2026, were primarily attributable to income tax benefits associated with stock award settlement activity.

For the three and six months ended June 30, 2026, the Company’s effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to income tax benefits associated with stock award settlement activity.

The Company's unrecognized tax benefits increased by $1 million and $4 million during the three and six months ended June 30, 2026, respectively. As of June 30, 2026, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $109 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 six months ended June 30, 2026, interest and penalties resulting from the unrecognized tax benefits noted above increased income tax expense by $1 million and $3 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.

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.

9. 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 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. 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. 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 decision in September 2022, allowing the Company’s claim to proceed. In April 2026, the lower court granted the reinsurers' motion for summary judgment. The Company has appealed the lower court's decision to the Vermont Supreme Court and cannot at this time predict the outcome 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.

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. 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 six months ended June 30, 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. 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. 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.

10. 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 June 30, 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 June 30, 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 June 30, 2026, the Company had $10 million in issued but undrawn letters of credit and $283 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.

Collective Bargaining Agreements - Of the Company's approximately 45,000 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. 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.

11. 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 each of the three and six months ended June 30, 2026 and 2025, were as follows:


	Three Months Ended June 30								Six Months Ended June 30
	Pension Benefits				Other Benefits				Pension Benefits				Other Benefits
($ in millions)	2026		2025		2026		2025		2026		2025		2026		2025
Components of net periodic benefit cost
Service cost	$	22	$	21	$	1	$	1	$	43	$	43	$	2	$	2
Interest cost	84		84		4		5		169		168		8		9
Expected return on plan assets	(143)		(137)		—		—		(287)		(274)		—		—
Amortization of prior service cost (credit)	4		4		—		—		8		8		—		—
Amortization of net actuarial loss (gain)	1		—		(3)		(3)		2		—		(6)		(6)

Net periodic benefit (income) cost	$	(32)	$	(28)	$	2	$	3	$	(65)	$	(55)	$	4	$	5

The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the six months ended June 30, 2026 and 2025:


	Six Months Ended June 30
($ in millions)	2026		2025
Pension plans

Discretionary
Qualified	$	2	$	—
Non-qualified	6		7
Other benefit plans	21		21
Total contributions	$	29	$	28

As of June 30, 2026, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2026.

12. STOCK COMPENSATION PLANS

During the six months ended June 30, 2026 and 2025, the Company issued new stock awards as follows:

Restricted Performance Stock Rights - For the six months ended June 30, 2026, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $433.96. These rights are subject to cliff vesting on December 31, 2028. For the six months ended June 30, 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 six months ended June 30, 2026, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $434.27. For the six months ended June 30, 2025, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $168.92. 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 six months ended June 30, 2026, the Company granted approximately 1,900 retention RSRs at a weighted average share price of $363.70, with cliff vesting two years from the grant date. For the six months ended June 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.

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 six months ended June 30, 2026, and 2025, was as follows:


	Stock Awards (in thousands)	Weighted-Average Grant Date Fair Value		Weighted-Average Remaining Contractual Term (in years)
Outstanding at December 31, 2024	550	$	221.59	1.0 year
Granted	305	169.37
Adjusted due to performance	18	169.37
Vested	(192)	215.26
Forfeited	(24)	224.25
Outstanding at June 30, 2025	657	$	198.68	1.3 years

Outstanding at December 31, 2025	663	$	199.43	1.0 year
Granted	121	431.27
Adjusted due to performance	24	431.27
Vested	(262)	203.11
Forfeited	(25)	246.59
Outstanding at June 30, 2026	521	$	250.32	1.2 years

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