Huntington Ingalls Industries Q1 2025 Earnings: Revenue Falls Short, EPS Exceeds Expectations

Huntington Ingalls Industries reported Q1 2025 earnings with revenue of $2.73b, down 2.5% YoY, and net income of $149m, down 2.6% YoY. EPS beat expectations by 31%, but profit margin decreased to 5.4%. The company's shares are up 1.8% from a week ago, with revenue forecast to grow 4.8% p.a. over the next 3 years.

Huntington Ingalls Industries Inc. (HII) reported its first-quarter 2025 earnings on May 1, 2025, revealing mixed financial performance. The company's revenue stood at $2.7 billion, a decrease of 2.5% year-over-year (YoY) compared to the same period last year. Net income for the quarter was $149 million, down 2.6% YoY. Earnings per share (EPS) beat expectations by 31%, reaching $3.79, but the profit margin decreased to 5.9% from 5.5% in the same period last year [1].

The company's backlog remained strong at $48 billion, with approximately $28 billion currently funded. Segment operating income increased by less than 1% to $171 million, while operating margins were 5.9%, compared to 5.5% in the same period last year. Net earnings were $149 million, compared to $153 million in the first quarter of 2024. Free cash flow was negative $462 million for the quarter, with cash used in operations totaling $395 million. Net capital expenditures were $67 million, or 2.5% of revenues. Cash dividends were $1.35 per share, totaling $53 million in aggregate. Liquidity was approximately $1.5 billion at the end of the first quarter [1].

The earnings report highlighted several key points. Newport News Shipbuilding is modestly behind plan due to atypical weather and delays in receiving major equipment for CVN 80, impacting construction progress. However, Ingalls Shipbuilding is largely on plan and achieved a 20% year-over-year improvement in shipbuilding throughput. The company secured a Block V FY24 two-boat contract and is focusing on future contracts, such as Block VI and Columbia Build II, aligning with defense priorities. The company is actively involved in strategic partnerships, including an MOU with HD Hyundai Heavy Industries, to explore opportunities in ship production. The Mission Technologies Division achieved significant milestones, including delivering Lionfish small uncrewed undersea vehicles to the US Navy and developing a high-energy laser counter-drone system for the US Army [1].

The company's shares are up 1.8% from a week ago, with revenue forecast to grow 4.8% per annum over the next three years. However, the company faces challenges in increasing workforce retention and productivity, with ongoing labor negotiations and the need for targeted wage support. Shipbuilding margins are expected to be near the low end of the annual guidance range in the second quarter, reflecting conservative guidance and ongoing risks [1].

In conclusion, Huntington Ingalls Industries reported mixed financial performance in the first quarter of 2025. While revenue and net income decreased, EPS beat expectations, and the company continues to make progress in its operational initiatives and strategic partnerships. The company's strong backlog and focus on future contracts provide a positive outlook for the remainder of the year.

References:
[1] https://finance.yahoo.com/news/huntington-ingalls-industries-inc-hii-070956923.html