AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 3/6 · 18/10/2026
Moat69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · The two-builder destroyer position, specialized labor requirements, and repeated awards demonstrate a strong current structural advantage in shipbuilding. Comparable protection is not established for Mission Technologies.
durability · 3/4 · Successive multiyear awards and continued backlog growth support persistence across procurement cycles. Annual funding and the realized cutter termination prevent an exceptional durability assessment.
customer dependency · 3/4 · Only two disclosed destroyer builders, a design-agent role, specialized nuclear activities, and follow-on awards indicate dependence on established capabilities. This is indirect evidence of switching friction, without a quantified switching cost or exclusive customer commitment.
erosion resilience · 2/4 · Awards and backlog remain strong despite realized workforce and supplier problems. Lower Ingalls margins and program termination show that structural protection does not insulate economic returns or every order.
Pricing power—
Insufficient evidence for every rubric criterion; no category score is inferred.
realized pricing · — · Contract terms and catch-up revenue adjustments are disclosed, but the passages do not isolate realized price changes, concessions, or escalation recoveries from costs, volume, and estimates. A numerical assessment of observed pricing would require an unsupported attribution.
retention · 3/4 · Repeated destroyer awards, continued new awards, and backlog growth demonstrate repeat demand indirectly through procurement outcomes. No retention rate is inferred, and the cutter termination limits universality.
margin resilience · 2/4 · Operating results recovered in 2025 after the 2024 decline, while first-half 2026 Ingalls margins fell despite revenue growth. Cost reimbursement and some escalation protection provide partial resilience, with realized supplier difficulties and contract adjustments showing incomplete protection.
contractual freedom · 1/4 · Firm fixed-price work is generally not adjustable for incurred costs, cost-type profit is a fee, and escalation provisions are obtained only to the extent possible. The dominant government customer's stop-work authority further limits freedom over terms.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 4.10
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 2.17
Financial strength—
Missing required inputs: netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 65.71
- interestCoverageGrade
- 47.79
- currentRatioGrade
- 30.67
- Debt / FCF (x)
- 3.40
- Interest coverage (x)
- 6.26
- Current ratio (x)
- 1.13
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -0.67
- 3-year average SBC / revenue (%)
- 0.31
- cashConversionGrade
- 81.59
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual 2025 cash generation supported capital spending, and no first-half 2026 repurchases were made. However, first-half operating cash outflow, continued investment and dividends, and sharply reduced cash temper the assessment. Management attributes the cash deterioration mainly to billing timing; this does not establish permanent impairment or superior investment returns.
incentive alignment · 2/4 · Actual NEO awards include a substantial performance-based equity component, and current performance rights have contingent vesting. Ownership guidelines and anti-hedging policies help alignment, but unvested rights count toward ownership and Ingalls paid above-target incentives despite below-target operating-margin performance. Individual ownership compliance is unavailable.
execution · 2/4 · Completed deliveries, new awards, and improved 2025 results demonstrate achievements. Realized labor and supplier difficulties, lower Ingalls margins, and volatile cash conversion make overall execution mixed. This assessment uses operating outcomes rather than management reputation or a measured schedule-compliance rate.
governance · 3/4 · Disclosed existing practices include independent standing committees and chairman, annual director elections, majority voting, shareholder nomination rights, and a clawback policy. Management also reports effective disclosure controls. These support strong formal safeguards, while issuer reporting and limited evidence of their effectiveness in contested situations preclude an exceptional grade.
Evidence
Surface Combatants We are a design agent for, and one of only two companies that constructs, Arleigh Burke class guided missile destroyers ("DDG"), a class of surface combatant.
Business — Surface Combatants · Filed 05/02/2026
Lucas (DDG 125) in 2023. In 2018, we were awarded a multi-year contract for construction of six Arleigh Burke class (DDG 51) destroyers and, in 2020, a contract to construct an additional Arleigh Burke class (DDG 51) destroyer.
Business — destroyer deliveries and 2018/2020 awards · Filed 05/02/2026
In 2023, we were awarded a multi-year contract for construction of six more Arleigh Burke class (DDG 51) destroyers, as well as the first option ship, for a total of seven ships.
Business — 2023 multiyear destroyer award · Filed 05/02/2026
It is both capital- and skilled labor-intensive.
MD&A — shipbuilding capital and skilled-labor requirements · Filed 05/02/2026
Total backlog as of June 30, 2026, and December 31, 2025, was $57.3 billion and $53.1 billion, respectively.
MD&A — June 2026 and December 2025 backlog · Filed 30/07/2026
The value of new contract awards during the six months ended June 30, 2026, was approximately $10.7 billion, primarily driven by awards at Newport News and Ingalls.
MD&A — first-half 2026 contract awards · Filed 30/07/2026
The U.S. Navy, a large single customer with many needs and requirements, dominates the industry's customer base and is served by a fragile supplier base that has trended toward exclusive providers.
MD&A — dominant Navy customer and fragile supplier base · Filed 05/02/2026
Coast Guard to terminate production and delivery of the 11th and final ship.
Business — termination of final Coast Guard cutter · Filed 30/07/2026
A shortage of skilled employees has and may continue to impact our ability to perform our contracts and may impact our ability to compete for new contracts.
Risk Factors — realized skilled-employee shortages · Filed 05/02/2026
Disruptions and performance issues from our suppliers and subcontractors, unanticipated cost growth for the products and services they provide, or inconsistencies between our contractual obligations to our customers and our agreements with our subcontractors and suppliers, have adversely impacted and may in the future impact our ability to meet our commitments to customers.
Risk Factors — realized supplier and subcontractor disruption · Filed 05/02/2026
The U.S. Government also can stop work under a contract for a limited period of time for its convenience.
Risk Factors — government stop-work authority · Filed 05/02/2026
We employ individuals specializing in 19 crafts and trades, with approximately 7,000 engineers and designers and approximately 3,600 employees with advanced degrees.
Business — specialized trades, engineers, and designers · Filed 05/02/2026
As of December 31, 2025, we had 1,096 Master Shipbuilders at Newport News and 212 at Ingalls.
Business — Master Shipbuilders at year-end 2025 · Filed 05/02/2026
The core business of our Newport News segment is designing and constructing nuclear-powered aircraft carriers and submarines, and the refueling and overhaul and the inactivation of nuclear-powered aircraft carriers.
Business — Newport News nuclear construction and lifecycle activities · Filed 05/02/2026
During the year we achieved critical milestones across the enterprise, including the delivery of Virginia-class submarine Massachusetts (SSN 798), guided missile destroyer Ted Stevens (DDG 128) and our 750th unmanned undersea vehicle (UUV).
Proxy — completed 2025 delivery milestones · Filed 20/03/2026
Government contracts or with government funding and may use or authorize other parties to use such intellectual property.
Business — government authorization of third-party intellectual-property use · Filed 05/02/2026
While our intellectual property rights are important to our operations, we do not believe that any existing patent, license, or other intellectual property right is of such importance that its loss or termination would have a material adverse impact on our business.
Business — lack of dependence on an individual intellectual-property right · Filed 05/02/2026
Our Mission Technologies segment competes domestically and internationally against midsized to large traditional aerospace and defense ("A&D") companies and non-traditional defense technology companies.
Business — Mission Technologies competitive environment · Filed 05/02/2026
•Firm Fixed-Price Contracts - A firm fixed-price contract is a contract in which the specified scope of work is agreed to for a price that is predetermined by bid or negotiation and not generally subject to adjustment regardless of costs incurred by the contractor.
MD&A — firm fixed-price contract terms · Filed 05/02/2026
•Cost-Type Contracts - Cost-type contracts provide for reimbursement of the contractor's allowable costs plus a fee that represents profit.
MD&A — cost-type reimbursement and fee · Filed 05/02/2026
We mitigate some cost inflation risk by negotiating long-term agreements with certain raw material suppliers and incorporating price escalation provisions in customer contracts to the extent possible.
MD&A — partial inflation mitigation through escalation provisions · Filed 30/07/2026
2025 2026 vs. 2025 ($ in millions) 2026 2025 Dollars Percent 2026 2025 Dollars Percent Sales and service revenues $ 845 $ 724 $ 121 17 % $ 1,570 $ 1,361 $ 209 15 % Segment operating income 58 54 4 7 % 107 100 7 7 % As a percentage of segment sales 6.9 % 7.5 % 6.8 % 7.3 % Sales and Service Revenues Ingalls revenues, including intersegment sales, for the three months ended June 30, 2026, increased $121 million, or 17%, from the same period in 2025, primarily driven by higher volumes in amphibious assault ships.
MD&A — Ingalls revenue, operating income, and margins · Filed 30/07/2026
2026 Proxy Statement 91 Table of Contents ANNEX A Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures Segment Operating Income and Segment Operating Margin Year Ended December 31 ($ in millions) 2025 2024 Sales and Service Revenues 12,484 11,535 Operating Income 657 535 Operating Margin 5.3 % 4.6 % Non-segment factors affecting operating income: Operating FAS/CAS Adjustment 35 62 Non-current state income taxes 25 -24 Segment Operating Income 717 573 Segment Operating Margin 5.7 % 5 % Free Cash Flow Year Ended December 31 ($ in millions) 2025 2024 Net cash provided by operating activities 1,196 393 Less capital expenditures: Capital expenditure additions (402) (367) Grant proceeds for capital expenditures 6 14 Free Cash Flow 800 40 92 Huntington Ingalls Industries, Inc.
Annex A — 2024/2025 operating results, capital expenditures, and cash flow · Filed 20/03/2026
The following table reconciles operating income to segment operating income: Year Ended December 31 2025 over 2024 2024 over 2023 ($ in millions) 2025 2024 2023 Dollars Percent Dollars Percent Operating income $ 657 $ 535 $ 781 $ 122 23 % $ (246) (31) % Operating FAS/CAS Adjustment 35 62 72 (27) (44) % (10) (14) % Non-current state income taxes 25 (24) (11) 49 204 % (13) (118) % Segment operating income $ 717 $ 573 $ 842 $ 144 25 % $ (269) (32) % FAS/CAS Adjustment and Operating FAS/CAS Adjustment The FAS/CAS Adjustment reflects the difference between expenses for pension and other postretirement benefits determined in accordance with FAS and the expenses for these items included in segment operating income in accordance with CAS.
MD&A — 2023–2025 operating and segment operating income · Filed 05/02/2026
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.
Financial statements — first-half 2026/2025 cash flows · Filed 30/07/2026
2025 ($ in millions) 2026 2025 Dollars Net cash provided by (used in) operating activities $ (421) $ 428 $ (849) Less capital expenditures: Capital expenditure additions (193) (163) (30) Grant proceeds for capital expenditures 3 3 — Free cash flow $ (611) $ 268 $ (879) Free cash flow for the six months ended June 30, 2026, decreased $879 million from the same period in 2025, primarily due to an unfavorable change in trade working capital driven by the timing of billings across programs.
MD&A — free cash flow decline and billing timing · Filed 30/07/2026
For each of the six months ended June 30, 2026 and 2025, the Company did not repurchase any shares.
Stockholders' Equity — no first-half 2026 or 2025 repurchases · Filed 30/07/2026
All long-term incentive compensation awards granted to our NEOs in 2025 were comprised of 70% Restricted Performance Stock Rights (“RPSRs”) and 30% Restricted Stock Rights (“RSRs”).
Executive Compensation — actual 2025 NEO equity-award mix · Filed 20/03/2026
Blanchette Ingalls 2025 Metrics Goals @ 0% Goals @ 100% Goals @ 200% Performance Results Points Earned Weighting Final AIP Points Operational Metrics 0 100 200 161 161 40 % 64 Financial Metrics OM—Performance (%) 6.90 8.20 - 8.60 9.40 7.58 26 40 % 11 FCF—Performance ($M) 11 97 - 119 146 175 100 40 % 40 Financial Performance 51 Strategic Leadership Metrics 0 100 200 189 189 20 % 38 Total Performance (DPF) Total AIP Score 153 2025 AIP payouts for the NEOs were made at the performance scores reflected in the tables above; the performance scores represent the percentage of target incentive compensation at which payouts were made.
Executive Compensation — Ingalls targets, results, and actual incentive payout · Filed 20/03/2026
Board Structure and Governance: Highly qualified, independent Board with all standing committees comprising independent directors, an independent non-executive Chairman, and regular executive sessions without management Stockholder Rights: Annual elections for all directors, majority vote requirements for uncontested elections, and the ability for stockholders to propose their own nominees and call special meetings Stock Ownership: Robust stock ownership guidelines for directors and executives, a clawback policy for performance-based compensation, and a prohibition on hedging or pledging Company stock 4 Huntington Ingalls Industries, Inc.
Proxy summary — existing board structure, stockholder rights, and ownership policies · Filed 20/03/2026
•President and CEO—7 times base salary;
Executive Compensation — CEO stock-ownership guideline · Filed 20/03/2026
•Restricted Stock Rights (“RSRs”) (vested or unvested) granted in the form of restricted stock units and issued as part of a long-term incentive compensation award;
Executive Compensation — unvested restricted rights count toward ownership guidelines · Filed 20/03/2026
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.
Stock Compensation Plans — performance-based vesting range · Filed 30/07/2026
Based on that evaluation, the Company's Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) concluded that, as of June 30, 2026, the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed in reports the Company files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) accumulated and communicated to management to allow their timely decisions regarding required disclosure.
Controls and Procedures — management conclusion on disclosure controls · Filed 30/07/2026
24 Table of Contents Net Cumulative Catch-up Revenue Adjustments by Segment For the three and six months ended June 30, 2026 and 2025, net cumulative catch-up revenue adjustments by segment were as follows: Three Months Ended June 30 Six Months Ended June 30 ($ in millions) 2026 2025 2026 2025 Ingalls $ (2) $ 4 $ (5) $ 4 Newport News 8 (17) (1) (23) Mission Technologies 4 3 17 9 Net adjustments $ 10 $ (10) $ 11 $ (10) See Note 6: Revenue and Consolidated Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.
MD&A — realized cumulative catch-up revenue adjustments · Filed 30/07/2026
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.
Commitments and Contingencies — estimated revenues awaiting customer agreement · Filed 05/02/2026
U.S. Government programs are subject to annual congressional budget authorization and appropriation processes even though program performance may extend over several years.
Risk Factors — annual congressional authorization and appropriations · Filed 05/02/2026
