Huntington Ingalls Industries, Inc. (HII) | The Buildout — AI Infrastructure

——Mkt cap — · 52-wk —–— · YTD — · delayed
Updated Aug 12, 2026Q2 FY2026 reviewed
Huntington Ingalls Industries is America’s largest military shipbuilder; its AI/autonomy exposure is embedded in Mission Technologies and it is not a direct AI-infrastructure beneficiary.
Shipbuilding +15.7% YoY
Q2 FY2026 shipbuilding revenue $2.7B; fourth consecutive double-digit quarter.
Backlog $54B
March 31, 2026; post-Q2 backlog not disclosed after submarine award.
Submarine deal $76.6B
Agreement on Block VI and Columbia; ~$25B to Newport News.
Q2 FCF missed guide
Full-year $500–$600M reaffirmed; Q4 must deliver most.
The Buildout Takeaway
The signals point to a defense-industrial throughput turn, not a commercial AI demand story. HII is moving a large Navy backlog through hiring, distributed shipbuilding, and robotics; the key question is whether execution and fourth-quarter cash conversion keep pace with the raised margin path.
Analyst coverage
27 analysts·12 Buy14 Hold1 Sell
Coverage is thin — only 2 price estimates, so no target is shown
Management guidance
FY2026 shipbuilding revenue $10.2–$10.4B · shipbuilding margin 6.0%–6.5% · Mission Technologies revenue $3.0–$3.2B · Mission Technologies op margin ~5% · FCF $500–$600M · capex ~4–5% of sales · tax ~17%
Important: The Buildout is a data analytics platform. Content is generated by algorithms and AI agents using public filings, earnings transcripts, and market data. This is not personalized investment advice.
Our View

The Verdict

HII is America's largest military shipbuilder. Ingalls builds non-nuclear amphibious ships, surface combatants, and national security cutters in Mississippi. Newport News builds nuclear-powered aircraft carriers and submarines in Virginia. Mission Technologies provides C5ISR, cyber, unmanned autonomous systems, and training. The AI-infrastructure connection is narrow: autonomy software, UUVs, and unmanned surface vessels sit inside Mission Technologies. The core shipbuilding business has essentially no direct AI-demand exposure.

Market Cap—
Revenue (TTM)$13.2B
Revenue Growth+14.0%
EBITDA Margin (TTM)7.6%
Net Debt$2.9B
Earnings Beats5 of 7
P/E (TTM)—
EV/EBITDA (TTM)—

What We Like

  • Four consecutive quarters of double-digit shipbuilding growth; Q2 FY2026 shipbuilding revenue was $2.7B, up 15.7% YoY.
  • Submarine agreement reached: $76.6B of contract modifications, with approximately $25B to Newport News and about $5.5B on Columbia.
  • FY2026 shipbuilding guidance raised to $10.2–$10.4B revenue and 6.0%–6.5% margin, with the lower bound raised from 5.5%.
  • Backlog of $54B at March 31, 2026, with about 40% of remaining performance obligations expected to convert through 2027.
  • Throughput and labor momentum: 12% year-to-date throughput improvement toward a 15% full-year target, with over 3,500 shipbuilders hired year-to-date.

What We’re Watching

  • LHA 8 test-program challenges continue to require EAC adjustments; delivery is still planned for 2027.
  • Full-year free cash flow of $500–$600M is heavily back-half loaded; Q1 was negative $464M, Q2 missed forecast, and Q3 is guided to about $100M.
  • Mission Technologies Q3 operating margin is guided to about 4%, down from Q2's 7.2%, on deliberate unmanned investment.
  • CVN-79 acceptance trials are set to begin within a week or two of the July 30 call; problems would pressure Newport News margin and cash.
Bottom Line

The thesis is strengthening on demand and production: the submarine package closed, FY2026 shipbuilding guidance was raised, and shipbuilding growth stayed double-digit for a fourth straight quarter. The unresolved portion is timing and cash conversion, not order flow. The open question is whether HII can turn the backlog and new submarine contracts into five delivered ships over the next 12 months and meet the back-loaded full-year free cash flow target.

Next upSubmarine contract definitization is contemplated in Q3 2026; it tests formal booking and any incentive recognition. CVN-79 acceptance trials are guided to begin within a week or two of July 30, 2026 and test the path to 2027 delivery.
Last Quarter — Q2 FY2026

Earnings Beat

Q2 FY2026 revenue was $3.4B, up 10.9% year over year, with gross margin of 13.2%. The standout was shipbuilding revenue of $2.7B, up 15.7% year over year—the fourth consecutive double-digit shipbuilding quarter.

MetricQ2 FY2026Q1 FY2026Q2 FY2025YoY
Revenue$3.4B$3.1B$3.1B+10.9%
Gross margin13.2%13.2%12.8%+40bps
EBITDA$289M$231M$237M+21.9%
EPS$5.27$3.79$3.86+36.5%
Shipbuilding revenue$2.7B$2.4Bn/a+15.7% YoY
an agreement has been reached on VCS Block VI and the next Columbia submarine contracts.— Chris Kastner, CEO, July 30, 2026

Management tone: Management's tone shifted from steady but guarded on the Q1 call to markedly more confident on the Q2 call. The change followed the submarine agreement, the raised shipbuilding guide, and management's statement that HII is running out in front of its 6% medium-term guide.

Management Guidance

For FY2026, management raised shipbuilding revenue guidance to $10.2–$10.4B and shipbuilding margin to 6.0%–6.5%, with the lower bound raised from 5.5%. Mission Technologies revenue was reaffirmed at $3.0–$3.2B and operating margin at approximately 5%; free cash flow was reaffirmed, and Mission Technologies EBITDA margin was reaffirmed at 8.4%–8.6%. Q3 guidance calls for shipbuilding revenue of about $2.6B, shipbuilding margin similar to Q2's 6.3%, Mission Technologies revenue similar to $760M, a Mission Technologies operating margin of about 4%, and free cash flow of about $100M.

Business Trajectory

Trajectory

The audited trailing quarters are uneven: revenue moved from $3,192M to $3,476M to $3,099M to $3,418M across the last four quarters, which the code-computed trajectory reads as decelerating. The margin picture is better—gross margin is stable and EBITDA margin expanded to 8.5% in Q2. The driver is shipbuilding volume, with Mission Technologies revenue down 3.9% in Q2 on a prior-year $45M non-recurring contract resolution comparison.

Revenue & Margin Trajectory
RevenueGross margin$0$2.0B$1.7B$1.9B$1.7B$1.9B$1.9B$2.0B$1.9B$2.0B$2.1B$2.2B$2.1B$2.2B$2.2B$2.4B$2.3B$2.0B$2.3B$2.8B$2.3B$2.2B$2.3B$2.7B$2.6B$2.7B$2.6B$2.8B$2.7B$2.8B$2.8B$3.2B$2.8B$3.0B$2.7B$3.0B$2.7B$3.1B$3.2B$3.5B$3.1B$3.4B19%13%Q3'16Q4Q1'17Q2Q3Q4Q1'18Q2Q3Q4Q1'19Q2Q3Q4Q1'20Q2Q3Q4Q1'21Q2Q3Q4Q1'22Q2Q3Q4Q1'23Q2Q3Q4Q1'24Q2Q3Q4Q1'25Q2Q3Q4Q1'26Q2
RevenueGross margin$0$2.0B$1.7B$1.9B$1.7B$1.9B$1.9B$2.0B$1.9B$2.0B$2.1B$2.2B$2.1B$2.2B$2.2B$2.4B$2.3B$2.0B$2.3B$2.8B$2.3B$2.2B$2.3B$2.7B$2.6B$2.7B$2.6B$2.8B$2.7B$2.8B$2.8B$3.2B$2.8B$3.0B$2.7B$3.0B$2.7B$3.1B$3.2B$3.5B$3.1B$3.4B19%13%Q3'16Q4Q1'17Q2Q3Q4Q1'18Q2Q3Q4Q1'19Q2Q3Q4Q1'20Q2Q3Q4Q1'21Q2Q3Q4Q1'22Q2Q3Q4Q1'23Q2Q3Q4Q1'24Q2Q3Q4Q1'25Q2Q3Q4Q1'26Q2
Gross margin as reported.
Share Price — 12 Months
$200$400$052-wk high $445Aug '25NovFeb '26MayAug '26
52-week range $265–$445.
Share Price — 12 Months
$200$400$052-wk high $445Aug '25NovFeb '26MayAug '26
52-week range $265–$445.
The Numbers

The Model

The locked model projection is $12,850M revenue and $1,015M EBITDA in FY+1, a 7.9% margin, rising to $13,750M revenue and $1,210M EBITDA in FY+2, an 8.8% margin. The near-term is anchored on shipbuilding growth and stable Mission Technologies revenue; the FY+2 step-up reflects margin expansion as the model carries higher shipbuilding volume into improved EBITDA conversion.

Revenue & EBITDA Projections
REVENUE$12.5B$12.8B$13.8BFY25FY+1 (E)FY+2 (E)EBITDA & MARGIN$962M$1.0B$1.2B8.8%FY25FY+1 (E)FY+2 (E)
REVENUE$12.5B$12.8B$13.8BFY25FY+1 (E)FY+2 (E)EBITDA & MARGIN$962M$1.0B$1.2B8.8%FY25FY+1 (E)FY+2 (E)
Solid bars are reported actuals; outlined bars are model projections — not company guidance.
MetricFY2025Next FY (E)Following FY (E)
Revenue$12.5B$12.8B$13.8B
YoY Growth—+2.9%+7.0%
EBITDA$962M$1.0B$1.2B
EBITDA Margin7.7%7.9%8.8%

Projections are the median of 5 independent model runs. The model’s revenue sits 0.5% below analyst consensus.

For FY2026, management raised shipbuilding revenue guidance to $10.2–$10.4B and shipbuilding margin to 6.0%–6.5%, with the lower bound raised from 5.5%. Mission Technologies revenue was reaffirmed at $3.0–$3.2B and operating margin at approximately 5%; free cash flow was reaffirmed, and Mission Technologies EBITDA margin was reaffirmed at 8.4%–8.6%. Q3 guidance calls for shipbuilding revenue of about $2.6B, shipbuilding margin similar to Q2's 6.3%, Mission Technologies revenue similar to $760M, a Mission Technologies operating margin of about 4%, and free cash flow of about $100M.

What Could Go Right — and Wrong

What good looks like
  • Clean execution of the five-ship delivery plan over the next 12 months converts the raised guide into completed deliveries.
  • Submarine incentive capture after Q3 definitization lifts shipbuilding margin toward the top of the 6.0%–6.5% range.
  • Ingalls labor inflection accelerates H2 throughput after the March collective bargaining agreement.
  • Frigate and battleship programs enter guidance, raising the medium-term shipbuilding outlook.
  • MUSV/ROMULUS September 2026 at-sea testing succeeds and opens a path to production orders.
What could go wrong
  • CVN-79 acceptance trials or LHA 8 test-program deterioration create new EAC charges and delay delivery.
  • Q4 free cash flow disappoints and the full-year $500–$600M target is missed.
  • Underlying aircraft-carrier performance weakness persists despite favorable Q2 adjustments.
  • Labor competition or sole-source component disruptions bind throughput and cost.
  • Mission Technologies unmanned investment compresses margins for several quarters without material revenue.
What’s Next

Looking Ahead

The next 12 months are dominated by delivery and cash execution. Submarine contract definitization is contemplated in Q3 2026; CVN-79 acceptance trials start near-term; SSN-800 and LPD-30 deliveries are expected later in 2026; and LHA 8 test-readiness remains ahead of a 2027 delivery. In September 2026, MUSV/ROMULUS at-sea testing tests whether the unmanned business can move from pipeline to production.

Catalysts
  • 1–2 weeks from Jul 30, 2026CVN-79 acceptance trials — Successful acceptance trials; preliminary acceptance later in 2026.
  • Q3 2026Submarine contract definitization — Formal contract booking and any Q3 incentive recognition.
  • September 2026MUSV/ROMULUS at-sea testing — Tests path from USV prototype to potential production contract.
  • Later 2026SSN-800 Arkansas delivery — Critical milestones in latter part of summer support delivery.
  • End of 2026LPD-30 Harrisburg delivery — Delivery expected toward end of 2026.
  • Q4 2026Free cash flow conversion — Q4 must carry most of the $500–$600M full-year target.
Numbers

Financials

Annual Summary

MetricFY2024FY2025TTMYoY
Revenue$11.5B$12.5B$13.2B+8.2%
Gross Margin12.6%12.8%12.6%+20bps
EBITDA$861M$962M$9.8B+11.7%
EBITDA Margin7.5%7.7%7.6%+24bps
Net Income$550M$605M$661M+10.0%
Free Cash Flow$279M$1.1B$4.9B—
Net Cash————

Key Ratios (Trailing)

Valuation
  • P/E TTM—
  • EV/EBITDA TTM—
  • EV/Revenue TTM—
  • Price/FCF TTM—
Profitability
  • Gross Margin (TTM)12.6%
  • EBITDA Margin (TTM)7.6%
  • Net Margin (TTM)5.0%
  • ROIC6.6%
  • FCF Conversion37.4%
  • SBC / Revenue0.4%
Reference

The Company

HII is America's largest military shipbuilder. Ingalls builds non-nuclear amphibious assault ships, surface combatants, and national security cutters from Pascagoula, Mississippi. Newport News builds nuclear-powered aircraft carriers and submarines in Virginia. Mission Technologies supplies C5ISR, cyber, unmanned autonomous systems, and nuclear/environmental joint ventures. About 81% of FY2025 revenue came from the U.S. Navy.

The company operates two government-oriented yards: Ingalls sits on about 800 acres along the Pascagoula River, and Newport News occupies roughly 550 acres near the James River. A leased Charleston, South Carolina site adds more than 480,000 square feet of manufacturing space. HII uses distributed shipbuilding—outsourcing blocks and units to partners—and is investing in robotics and welding automation to raise throughput.

Business Segments

Ingalls
Non-nuclear shipbuilding
Amphibious assault ships, surface combatants, and national security cutters built in Pascagoula, Mississippi.
Growth driver: Destroyer, LPD, LHA, and frigate lead-yard work.
Newport News
Nuclear shipbuilding
Nuclear-powered aircraft carriers, submarines, overhaul, refueling, and repair in Newport News, Virginia.
Growth driver: Submarine Block VI/Columbia agreement and carrier RCOH work.
Mission Technologies
Guided to $3.0–$3.2B FY2026 revenue
C5ISR, cyber, unmanned autonomous systems, training, and nuclear/environmental JVs.
Growth driver: Unmanned systems ramp and recent large task orders.

Competitive Landscape

HII's 10-K says Newport News and Ingalls compete primarily with General Dynamics and, for certain non-nuclear shipbuilding programs, smaller shipyards. At the same time, HII has a teaming agreement with General Dynamics' Electric Boat division to build Virginia-class submarines. The 10-K also notes that some components and parts may have only one supplier.

  • General Dynamics
    Primary competitor at Newport News and Ingalls; parent of Electric Boat and teaming partner on Virginia-class submarines.
  • Electric Boat
    General Dynamics division; teaming partner for Virginia-class submarine construction.
  • Smaller shipyards
    Named in the 10-K as competitors for certain non-nuclear shipbuilding programs.
Named in HII's 10-K; smaller shipyards are described but not named.

Supply Chain

HII is a demand anchor for U.S. naval shipbuilding. It relies on U.S. Government-approved supply sources for materials and components across the submarine and shipbuilding base.

Supplier
U.S. Government-approved suppliers
Approved materials and components for naval shipbuilds.
Supplier
Path Robotics / GrayMatter Robotics
Production agreements up to $900M for fabrication, assembly, and outfitting.
Supplier
HD Hyundai Heavy Industries / HD HHI
Welding automation pilot at Ingalls.
→
America’s largest military shipbuilder
HII
Design, construction, overhaul, and repair across Ingalls and Newport News, with Mission Technologies integration.
→
U.S. Navy
81% of FY2025 revenue
Primary customer across shipbuilding and many Mission Technologies programs.
U.S. Coast Guard
Customer for Ingalls non-nuclear ships.
U.S. Marine Corps
Small USV prototypes under a DIU contract.
U.S. Southern Command / DoD
$2.2B task order
STRINGRAI surveillance/intelligence work and cyber/data mesh.

Analysis updated Aug 12, 2026, reviewing Q2 FY2026. Prices delayed. Built with The Buildout’s published methodology. Not investment advice. No positions held. © The Buildout 2026.

More on HII: Earnings recap