Huntington Ingalls Industries, Inc.
Analysis
Huntington Ingalls is finally building faster — four straight quarters of double-digit shipbuilding growth and a raised 2026 outlook — but the profit and cash from that work still trail the revenue. How much of the backlog is still pre-COVID work?
- The yards really are building faster, and it now shows in revenue.
Shipbuilding revenue grew double digits four quarters running and management raised the full-year outlook in Q2 FY2026. Throughput is the driver: more work done in the yards, more built by outside partners, outsourcing up another 30%. Which yard is driving the throughput gains, Ingalls or Newport News?
- Profit is not yet following the revenue.
Margin has stayed near 6% while revenue grew double digits. The yards are finishing ships signed before COVID, and the new work has a capped fee. Management says the mix flips to new contracts in 2027, when profit finally shows up.
- The build is eating more cash than the business makes.
Free cash flow was negative in both quarters this year and cash on hand fell to $12 million, as capital spending rises toward 5% of sales. Management still expects $500-600 million for the year, nearly all of it in the fourth quarter. How much of the year's cash depends on fourth-quarter contract advances?
- Throughput keeps improving at the 15% target. Each ship finished on time frees its crew to start the next one, so the yards earn more without hiring more.
- Work keeps shifting onto contracts signed after COVID. Those deals were priced with today's wages and materials in them, so profit per ship should finally start rising.
- The five ships due over the next year are handed over on time. The cash arrives when a ship is handed over, so the whole year's cash depends on those handovers landing.
- A delivery slips into the next year. The revenue and the cash tied to handing it over move out too, and the crew stays stuck on the same hull.
- Shipbuilding margin stays stuck near 6%. Growing sales at the same profit per ship means more work for the same reward, and more overtime to pay for.
- The overtime, outsourcing and new machines cost more than they return. The speed is being bought out of today's profit, so the yards can do more and still take home less.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Sale | ≥$15K | May 11 | Jul 1 |
Brian Babin Republican · House · TX-36 | Sale | ≥$15K | May 5 | May 18 |
Julie Johnson Democratic · House · TX-32 | Sale | ≥$1K | Feb 12 | Mar 12 |
Michael T. McCaul Republican · House · TX-10 | Sale | ≥$15K | Mar 2 | Apr 18 |
Michael T. McCaul Republican · House · TX-10 | Sale | ≥$50K | Mar 2 | Apr 18 |
Congressional trading data provided by QuiverQuant
How Huntington Ingalls Industries turned $12.5B of revenue into $657.0M of operating income.
| Revenue | ||
|---|---|---|
| Newport News Shipbuilding | $6.5B | ▲ 9.01% YoY |
| Ingalls | $3.1B | ▲ 11.24% YoY |
| Mission Technologies | $3.0B | ▲ 3.64% YoY |
| Total revenue | $12.5B | |
| Gross profit | $1.6B | 12.7% |
| Operating income | $657.0M | 5.3% |