Huntington Ingalls 2025 Q2 Earnings Earnings Decline Amid Record Backlog

Huntington Ingalls (HII) reported its fiscal 2025 Q2 earnings on Jul 31st, 2025. The company’s earnings per share exceeded analyst expectations, achieving $3.86 compared to the anticipated $3.43, despite a year-over-year decline. Huntington Ingalls also raised its FY25 free cash flow guidance to between $500 million and $600 million, reflecting enhanced cash generation and operational efficiency. These results align with the company's strategic investments and ongoing operational initiatives aimed at future growth and stability.

Revenue
In the second quarter of fiscal 2025, Huntington Ingalls reported a revenue increase of 3.5%, reaching $3.08 billion compared to the prior year's $2.98 billion. This growth was driven by Newport News Shipbuilding, which contributed $1.60 billion, Ingalls Shipbuilding with $724 million, and Mission Technologies adding $791 million. However, intersegment eliminations accounted for a $36 million reduction, culminating in the total revenue figure of $3.08 billion.

Earnings/Net Income
Huntington Ingalls experienced an 11.9% decline in earnings per share, falling to $3.86 from $4.38 in the previous year. Concurrently, net income decreased by 12.1% to $152 million from $173 million in the same quarter last year. Despite these declines, the company has maintained profitability for 16 consecutive years in the corresponding fiscal quarter, underscoring stable business performance.

Price Action
The stock price of Huntington Ingalls has edged up 0.07% during the latest trading day, has climbed 5.90% during the most recent full trading week, and has surged 15.49% month-to-date.

Post-Earnings Price Action Review
The investment strategy of acquiring Huntington Ingalls stock post-earnings beats and selling after 30 days yielded a return of 38.13%, which notably underperformed the benchmark return of 69.11%. Despite a moderate risk-adjusted return indicated by a Sharpe ratio of 0.50, the strategy lacked the downside protection typically associated with more volatile approaches, as evidenced by a maximum drawdown of 0%. This suggests that while the strategy offers some stability, it may not capture the full potential gains in more dynamic market conditions.

CEO Commentary
"Second quarter results were largely in line with our expectations as we continue to make steady progress on our operational initiatives for 2025. We have seen early signs that targeted investments are helping to stabilize the workforce and supply chain, in support of the broader maritime industrial base," said Chris Kastner, President and CEO of HII. The revenue growth in the second quarter was driven by Newport News Shipbuilding, Mission Technologies, and Ingalls Shipbuilding, despite facing challenges in operating income and margin primarily due to less favorable results at Newport News Shipbuilding.

Guidance
HII reaffirms its fiscal year 2025 segment revenue and operating margin guidance. The company’s forward-looking statements reflect its judgment based on the information available at the time, emphasizing that ongoing operational initiatives and strategic investments are expected to contribute positively to future performance, as evidenced by record backlog levels and recent contract awards.

Additional News
Huntington Ingalls has announced a strategic partnership with C3 AI to enhance shipbuilding efficiency through artificial intelligence, aiming to optimize production processes. This collaboration is anticipated to leverage AI technology to streamline operations and reduce costs in capital-intensive shipbuilding endeavors. Additionally, Huntington Ingalls has deepened its international collaboration with HD Hyundai Heavy Industries through a Memorandum of Understanding, exploring avenues for accelerating ship production. This partnership signals Huntington Ingalls’ commitment to incorporating global best practices to address domestic production challenges and enhance throughput capabilities.