HUNTINGTON INGALLS INDUSTRIES, INC.
For the period ended Sep 30, 2025. Filed Oct 30, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Oct 30, 2025
HII$288.74-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-07-31.
0001501585-25-000099
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-10-30.
0001501585-25-000112
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 159 previous paragraphs and 156 current paragraphs.
102 unchanged; 33 reworded; 21 added; 24 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 16 previous and 16 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
Defense Spending Environment –On May 2, 2025, the Trump Administration released the President's topline recommendations on discretionary funding levels for fiscal year 2026, followed by detailed budget justification documents in June. Additionally, under the Public Law 119-21 (the "Act"), Congress provided mandatory funding for more than $29 billion for Shipbuilding and the Maritime Industrial Base. This funding included one Virginia class (SSN 774) fast attack submarine and two Arleigh-Burke class (DDG 51) guided-missile destroyers, and provided additional funding for amphibious warfare ships and unmanned surface vessels.
Current report
Lawmakers continue to consider the annual budget request for the federal government. The U.S. House of Representatives approved a fiscal year 2026 defense appropriations measure in July, and the U.S. Senate Committee on Appropriations advanced its defense appropriations measure out of committee in July. The House and Senate Committees on Armed Services acted on their respective National Defense Authorization bills for fiscal year 2026, with the House approving the authorization bill in September and the Senate approving the authorization bill in October.
Current report
Fiscal year 2026 began on October 1, 2025 without annual appropriations legislation or a continuing resolution. As a result, many parts of the U.S. Government temporarily shut down. This lapse in federal funding leaves the federal government sustaining only those activities that are determined to be excepted or funded through means other than fiscal year 2026 annual appropriations.
Current report
Prior to the lapse in appropriations, the Department identified those missions and functions of the Department deemed high priority, including shipbuilding, that may continue through the use of available funds in the absence of new annual appropriations. Funds that remain available include those provided for certain shipbuilding programs under the Act.
Current report
According to Department guidance, “The expiration of an appropriation does not require the termination of contracts (or issuance of stop work orders) funded by that appropriation unless a new obligation of funds is required under the contract and the contract is not required to support an excepted activity." "The Department may continue to enter into new contracts, or place task orders under existing contracts, to obtain supplies and services necessary to carry out or support excepted activities even though there are no available appropriations.”
Current report
It remains uncertain at this point when funding will be enacted for fiscal year 2026 and whether it will be in the form of a continuing resolution or finalization of annual appropriations measures. We cannot predict the outcome of the fiscal year 2026 budget process, including any impact on the Company's programs.
Current report
Sales and service revenues for thethree and nine months ended September 30, 2025, increased $443 million, or 16%, and $477 million, or 6%, respectively compared to the same periods in 2024, primarily due to higher volumes at Newport News, Ingalls, and Mission Technologies.
Current report
Ingalls revenues, including intersegment sales, for the three months ended September 30, 2025, increased $164 million, or 25%, from the same period in 2024, primarily driven by higher volumes in surface combatants.
Current report
Ingalls segment operating income for the three months ended September 30, 2025, was $65 million, compared to segment operating income of $49 million for the same period in 2024. The increase was primarily driven by the higher volumes described above.
Current report
Newport News revenues, including intersegment sales, for the three months ended September 30, 2025, increased $205 million, or 15%, from the same period in 2024, primarily driven by higher volumes in submarines and aircraft carriers.
Current report
Newport News revenues, including intersegment sales, for the nine months ended September 30, 2025, increased $235 million, or 5%, from the same period in 2024, primarily driven by higher volumes in submarines.
Current report
Newport News segment operating income for the three months ended September 30, 2025, was $80 million, compared to segment operating income of $15 million for the same period in 2024. The increase was primarily driven by unfavorable cumulative catch-up adjustments in the Virginia class (SSN 774) submarine program and aircraft carriers in 2024.
Current report
Newport News segment operating income for the nine months ended September 30, 2025, was $247 million, compared to segment operating income of $208 million for the same period in 2024. The increase was primarily driven by risk retirement in the Columbia class (SSBN 826) submarine program and contract adjustments in the Virginia class (SSN 774) submarine program, partially offset by contract adjustments and incentives in 2024 in the RCOH program.
Current report
Mission Technologies segment operating income for the nine months ended September 30, 2025, was $110 million, compared to segment operating income of $97 million for the same period in 2024. The increase was primarily due to the higher volumes described above.
Current report
Product sales for the three months ended September 30, 2025, increased $311 million, or 18%, from the same period in 2024, primarily due to higher volumes in submarines and aircraft carriers at Newport News, and surface combatants at Ingalls.
Current report
Segment cost of product sales for the three months ended September 30, 2025, increased $264 million, or 17%, compared with the same period in 2024, primarily due to the higher volumes described above.
Current report
Segment cost of product sales for the nine months ended September 30, 2025, increased $261 million, or 6%, compared with the same period in 2024, primarily due to the changes in volume described above.
Current report
Service revenues for the three months ended September 30, 2025, increased $132 million, or 13%, from the same period in 2024, primarily due to higher volumes in C5ISR and live, virtual, and constructive training solutions at Mission Technologies, higher volumes in naval nuclear support services and aircraft carriers at Newport News, and higher volumes in surface combatants at Ingalls.
Current report
Segment cost of service revenues for the three months ended September 30, 2025, increased $114 million, or 13%, compared with the same period in 2024, primarily due to the higher volumes described above.
Current report
Segment cost of service revenues for the nine months ended September 30, 2025, increased $185 million, or 7%, compared with the same period in 2024, primarily due to the higher volumes described above.
Current report
Interest expense for the three months ended September 30, 2025, was $23 million, which was consistent with the same period in 2024. There were no individually significant drivers for interest expense during the period.
Removed paragraphs (24)
Previous report
Defense Spending Environment – The federal government is operating under the Full-Year Continuing Appropriations and Extensions Act, 2025, signed into law March 15, 2025. This marks the first time the DoD has operated under a Continuing Resolution ("CR") for a full fiscal year. While unprecedented, exceptions were made to the Navy Shipbuilding and Conversion account in the full-year CR to provide the necessary authorities and funding for program execution.
Previous report
The fiscal year 2026 budget process is unique. As proposed, the first budget submission of Donald Trump’s second Administration requested two Congressional bills to be passed — a base annual appropriations bill and a budget reconciliation bill. For fiscal year 2026, the Administration recommends a National Defense budget of $1.01 trillion, of which $961.6 billion is specific to the Pentagon and consists of $848.3 billion for the Pentagon’s annual discretionary budget and $113.3 billion for the Pentagon in mandatory funding via Congressional reconciliation. On May 2, 2025, the Administration released the President's topline recommendations on discretionary funding levels for fiscal year 2026, followed by detailed budget justification documents in June. The Department of the Navy requested $248.9 billion in the base budget and $43.3 billion in reconciliation funds. Included in the Navy's proposed fiscal year 2026 budget is $47.4 billion for shipbuilding — $20.9 billion in the base budget request and $26.5 billion in reconciliation funding. The proposed budget relies on reconciliation funding to fund 14 of 17 battle force ships requested.
Previous report
Combined, the base budget and reconciliation budget reflect continued investment in shipbuilding. The Navy’s fiscal year 2026 base discretionary budget request seeks one Columbia class (SSBN 826) ballistic missile submarine, one
Previous report
Virginia class (SSN 774) fast attack submarine and one ocean surveillance ship. The budget reconciliation bill, known as the One Big Beautiful Bill Act (the "Act"), was signed into law on July 4, 2025 and includes more than $29 billion for Shipbuilding and the Maritime Industrial Base. The Act funds one Virginia class (SSN 774) fast attack submarine, two Arleigh Burke class (DDG 51) guided-missile destroyers, nine Landing Ship Mediums and two John Lewis class (T-AO 205) fleet oilers. Funding is also provided for amphibious warfare ships and unmanned surface vessels.
Previous report
Lawmakers proceeded with consideration of the fiscal year 2026 budget request for the Federal government, while simultaneously considering the reconciliation bill. On July 18, 2025, the House approved its Fiscal Year 2026 Defense Appropriations Bill which was developed to complement the defense investments in the reconciliation bill. For the shipbuilding account, the House appropriation bill provides $36.9 billion in base discretionary funding, including six battle force ships: one Columbia class (SSBN 826) ballistic missile submarine, two Virginia class (SSN 774) fast attack submarines, two Arleigh Burke class (DDG 51) guided missile destroyers, and one T-AGOS SURTASS ship for antisubmarine warfare. Additionally, the House appropriations bill includes $1.5 billion for the Maritime Industrial Base to invest in critical areas including supplier capacity and capability, strategic outsourcing, workforce training, and technology, and infrastructure; $1.6 billion for productivity enhancements to improve shipbuilder capability, capacity, and efficiency at the private nuclear shipyards; and $521 million for wage enhancements at the private nuclear shipyards. The timing of Senate Appropriations Committee action remains uncertain.
Previous report
Both the Senate Armed Services Committee ("SASC") and the House Armed Services Committee ("HASC") approved their respective versions of the fiscal year 2026 National Defense Authorization Act ("NDAA") legislation in July.
Previous report
The SASC authorization bill supports a total of $925 billion in fiscal year 2026 funding for national defense, including $878.7 billion for the Defense Department, $35.2 billion for defense programs within the Department of Energy, and $11.1 billion for defense spending outside the jurisdiction of the NDAA. Language is included in the bill that authorizes the procurement of up to five Columbia class (SSBN 826) ballistic missile submarines and supports amphibious warship production by reinforcing the statutory requirement for 31 amphibious ships. Additional funding is authorized for Virginia class (SSN 774) submarines and Arleigh Burke class (DDG 51) destroyers.
Previous report
In addition to the Virginia class (SSN 774) submarine and two Arleigh Burke class (DDG 51) destroyers provided for by reconciliation, the HASC bill authorizes the procurement of the third Columbia class (SSBN 826) submarine and additional funding for Virginia class (SSN 774) submarines. Additionally, the HASC bill supports the authorization of advance procurement for future Columbia class (SSBN 826) submarines, additional funding for Virginia class (SSN 774) submarines, as well as completion of prior year ships including aircraft carriers and Virginia class (SSN 774) submarines.
Previous report
We cannot predict the outcome of the fiscal year 2026 budget process or if short-term funding will be made available if annual appropriations measures are not finalized by the start of the new fiscal year on October 1, 2025.
Previous report
Sales and service revenues for the three months ended June 30, 2025, increased $105 million, or 4%, compared to the same period in 2024, primarily due to higher volumes at Newport News, Mission Technologies, and Ingalls. Sales and service revenues for the six months ended June 30, 2025, increased $34 million, or 1%, compared to the same period in 2024, primarily due to higher volumes at Newport News and Mission Technologies, partially offset by lower volumes at Ingalls.
Previous report
Non-current state income tax expense was $3 million for the six months ended June 30, 2025, compared to a non-current state income tax benefit of $2 million for the six months ended June 30, 2024. The unfavorable change in non-current state income taxes for the six months ended June 30, 2025 was driven by an increase in deferred state income tax expense, primarily attributable to the timing of depreciation deductions and the timing of long-term contract income for income tax purposes.
Previous report
Ingalls revenues, including intersegment sales, for the six months ended June 30, 2025, decreased $6 million from the same period in 2024, primarily driven by lower volumes in amphibious assault ships, partially offset by higher volumes in surface combatants.
Previous report
Ingalls segment operating income for the six months ended June 30, 2025, was $100 million, compared to segment operating income of $116 million for the same period in 2024. The decrease was primarily driven by lower performance and lower contract incentives on amphibious assault ships, partially offset by contract adjustments in surface combatants.
Previous report
Newport News revenues, including intersegment sales, for the three months ended June 30, 2025, increased $68 million, or 4%, from the same period in 2024, primarily driven by higher volumes in the Columbia class (SSBN 826) submarine program and the Virginia class (SSN 774) submarine program, partially offset by cumulative catch-up adjustments on aircraft carrier construction, and favorable contract adjustments and incentives in the second quarter of 2024 on the RCOH program.
Previous report
Newport News revenues, including intersegment sales, for the six months ended June 30, 2025, increased $30 million, or 1%, from the same period in 2024, primarily driven by higher volumes in the Columbia class (SSBN 826) submarine program and the Virginia class (SSN 774) submarine program, partially offset by cumulative catch-up adjustments on aircraft carrier construction, and favorable contract adjustments and incentives in 2024 on the RCOH program.
Previous report
Newport News segment operating income for the three months ended June 30, 2025, was $82 million, compared to segment operating income of $111 million for the same period in 2024. The decrease was primarily driven by lower performance in the Virginia class (SSN 774) submarine program and aircraft carrier construction, as well as contract adjustments and incentives in the second quarter of 2024 on the RCOH program, partially offset by contract incentives on the Virginia class (SSN 774) submarine program and aircraft carrier construction, as well as higher risk retirement on the Columbia class (SSBN 826) submarine program.
Previous report
Newport News segment operating income for the six months ended June 30, 2025, was $167 million, compared to segment operating income of $193 million for the same period in 2024. The decrease was primarily driven by lower performance in the Virginia class (SSN 774) submarine program and aircraft carrier construction, as well as contract adjustments and incentives in 2024 on the RCOH program, partially offset by contract incentives on the Virginia class (SSN 774) submarine program and aircraft carrier construction, as well as higher risk retirement on the Columbia class (SSBN 826) submarine program.
Previous report
Mission Technologies segment operating income for the six months ended June 30, 2025, was $76 million, compared to segment operating income of $64 million for the same period in 2024. The increase was primarily driven by the volumes mentioned above and lower purchased intangible amortization.
Previous report
Product sales for the three months ended June 30, 2025, increased $31 million, or 2%, from the same period in 2024, primarily due to higher volumes in the Columbia class (SSBN 826) submarine program and the Virginia class (SSN 774) submarine program at Newport News, and surface combatants at Ingalls, partially offset by cumulative catch-up adjustments on aircraft carrier construction and favorable contract adjustments and incentives in the second quarter of 2024 on the RCOH program at Newport News, as well as lower volumes in amphibious assault ships at Ingalls.
Previous report
Segment cost of product sales for the three months ended June 30, 2025, increased $77 million, or 5%, compared with the same period in 2024, primarily due to the higher volumes described above.
Previous report
Segment cost of product sales for the six months ended June 30, 2025, decreased $3 million compared with the same period in 2024, primarily due to the lower volumes described above.
Previous report
Segment cost of service revenues for the three months ended June 30, 2025, increased $74 million, or 8%, compared with the same period in 2024, primarily due to the higher volumes described above.
Previous report
Service revenues for the six months ended June 30, 2025, increased $77 million, or 4%, from the same period in 2024, primarily due to higher volumes in surface combatants at Ingalls, and live, virtual, and constructive training solutions and cyber, electronic warfare & space at Mission Technologies, partially offset by lower volumes in C5ISR and fleet sustainment at Mission Technologies.
Previous report
Segment cost of service revenues for the six months ended June 30, 2025, increased $71 million, or 4%, compared with the same period in 2024, primarily due to the higher volumes described above.
Reworded paragraphs (33)
Previous wording
We conduct most of our business with the U.S. Government, primarily the Department of Defense ("DoD"). As prime contractor, principal subcontractor, team member, or partner, we participate in many high-priority U.S. defense programs. Ingalls includes our non-nuclear ship design, construction, repair, and maintenance businesses. Newport News includes all of our nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Our Mission Technologies segment is organized into four groups, All-Domain Operations, Warfare Systems, Global Security, and Uncrewed Systems, and specializes in a wide range of services and products across our capabilities, which include command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance ("C5ISR") systems and operations; the application of artificial intelligence and machine learning to battlefield decisions; defensive and offensive cyber, electronic warfare & space; uncrewed systems; live, virtual, and constructive training solutions; fleet sustainment; and critical nuclear operations.
Current wording
We conduct most of our business with the U.S. Government, primarily the Department of War (the "Department"). As prime contractor, principal subcontractor, team member, or partner, we participate in many high-priority U.S. defense programs. Ingalls includes our non-nuclear ship design, construction, repair, and maintenance businesses. Newport News includes all of our nuclear ship design, construction, overhaul, refueling, and repair and maintenance businesses. Our Mission Technologies segment is organized into four groups, All-Domain Operations, Warfare Systems, Global Security, and Uncrewed Systems, and specializes in a wide range of services and products across our capabilities, which include command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance ("C5ISR") systems and operations; the application of artificial intelligence and machine learning to battlefield decisions; defensive and offensive cyber, electronic warfare & space; unmanned systems; live, virtual, and constructive training solutions; fleet sustainment; and critical nuclear operations.
Previous wording
Global Geopolitical and Economic Environment– The global geopolitical and economic environment continues to be impacted by uncertainty, heightened geopolitical tensions, and instability. Geopolitical relationships continue to change, and the U.S. and its allies face a global security environment that includes threats from state and non-state actors, including major global powers, as well as terrorist organizations, emerging nuclear tensions, diverse regional security concerns, and political instability. These global threats persist across all domains, from undersea to space to cyber, and the global market for defense products, services, and solutions is driven by these complex and evolving security challenges. Our current operating environment exists in the broader context of political and socioeconomic priorities and reflects, among other things, the continued impact of and uncertainty surrounding geopolitical tensions, financial market volatility, inflation, trade policy, and a challenging labor market.
Current wording
Global Geopolitical and Economic Environment– The global geopolitical and economic environment continues to be impacted by uncertainty, heightened geopolitical tensions, and instability. Geopolitical relationships continue to change, and the U.S. and its allies face a global security environment that includes threats from state and non-state actors, including major global powers, as well as terrorist organizations, emerging nuclear tensions, diverse regional security concerns, and political instability. These global threats persist across all domains, from undersea to space to cyber, and the global market for defense products, services, and solutions is driven by these complex and evolving security challenges. In addition, changes in the global economic environment, including changes in international trade policies, including those imposing tariffs, could further impact the global market for defense products. Our current operating environment exists in the broader context of political and socioeconomic priorities and reflects, among other things, the continued impact of and uncertainty surrounding geopolitical tensions, financial market volatility, inflation, trade policy, and a challenging labor market.
Previous wording
For thethree and six months ended June 30, 2025 and 2024, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:
Current wording
For thethree and nine months ended September 30, 2025 and 2024, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:
Previous wording
General and administrative expenses for the three months ended June 30, 2025, decreased $14 million from the same period in 2024, primarily due to lower overhead costs. General and administrative expenses for the six months ended June 30, 2025, remained consistent with the same period in 2024.
Current wording
General and administrative expenses for each of thethree and nine months ended September 30, 2025, decreased $7 million from the same periods in 2024, primarily due to lower overhead costs.
Previous wording
The Operating FAS/CAS Adjustment was a net expense of $6 million and $15 million for the three months ended June 30, 2025 and 2024, respectively. The Operating FAS/CAS Adjustment was a net expense of $16 million and $32 million for the six months ended June 30, 2025 and 2024, respectively. The favorable change in the Operating FAS/CAS Adjustment for each period was primarily driven by higher interest rates under FAS.
Current wording
The Operating FAS/CAS Adjustment was a net expense of $9 million and $16 million for the three months ended September 30, 2025 and 2024, respectively. The Operating FAS/CAS Adjustment was a net expense of $25 million and $48 million for the nine months ended September 30, 2025 and 2024, respectively. The favorable change in the Operating FAS/CAS Adjustment for each period was primarily driven by higher interest rates under FAS.
Previous wording
Non-current state income tax expense was $3 million for the three months ended June 30, 2025, compared to a non-current state income tax benefit of $1 million for the three months ended June 30, 2024. The unfavorable change in non-current state income taxes for the three months ended June 30, 2025 was driven by an increase in deferred state income tax expense, primarily attributable to the timing of depreciation deductions for income tax purposes.
Current wording
Non-current state income tax expense was $9 million for the three months ended September 30, 2025, compared to a non-current state income tax benefit of $1 million for the three months ended September 30, 2024. Non-current state income tax expense was $12 million for the nine months ended September 30, 2025, compared to a non-current state income tax benefit of $3 million for the nine months ended September 30, 2024. The unfavorable changes in non-current state income taxes for the three and nine months ended September 30, 2025 were driven by an increase in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures.
Previous wording
For thethree and six months ended June 30, 2025 and 2024, net cumulative catch-up revenue adjustments by segment were as follows:
Current wording
For thethree and nine months ended September 30, 2025 and 2024, net cumulative catch-up revenue adjustments by segment were as follows:
Previous wording
Ingalls revenues, including intersegment sales, for the three months ended June 30, 2025, increased $12 million, or 2%, from the same period in 2024, primarily driven by higher volumes in surface combatants, partially offset by lower volumes in amphibious assault ships.
Current wording
Ingalls revenues, including intersegment sales, for the nine months ended September 30, 2025, increased $158 million, or 8%, from the same period in 2024, primarily driven by higher volumes in surface combatants, partially offset by lower volumes in amphibious assault ships.
Previous wording
Ingalls segment operating income for the three months ended June 30, 2025, was $54 million, compared to segment operating income of $56 million for the same period in 2024. The decrease was primarily driven by lower performance and lower contract incentives on amphibious assault ships, partially offset by contract adjustments in surface combatants.
Current wording
Ingalls segment operating income for each of the nine months ended September 30, 2025 and 2024, was consistent at $165 million. Higher volumes and contract adjustments in surface combatants were offset by lower volumes and lower performance in amphibious assault ships.
Previous wording
Mission Technologies revenues, including intersegment sales, for the three months ended June 30, 2025, increased $26 million, or 3%, from the same period in 2024, primarily due to higher volumes in C5ISR and live, virtual, and constructive training solutions.
Current wording
Mission Technologies revenues, including intersegment sales, for the three months ended September 30, 2025, increased $78 million, or 11%, from the same period in 2024, primarily due to higher volumes in C5ISR; cyber, electronic warfare & space; and live, virtual, and constructive training solutions.
Previous wording
Mission Technologies revenues, including intersegment sales, for the six months ended June 30, 2025, increased $11 million, or 1%, from the same period in 2024, primarily due to higher volumes in live, virtual, and constructive training solutions, cyber, electronic warfare & space, and uncrewed systems, partially offset by lower volumes in C5ISR and fleet sustainment.
Current wording
Mission Technologies revenues, including intersegment sales, for the nine months ended September 30, 2025, increased $89 million, or 4%, from the same period in 2024, primarily due to higher volumes in cyber, electronic warfare & space and live, virtual, and constructive training solutions, partially offset by lower volumes in fleet sustainment.
Previous wording
Product sales for the six months ended June 30, 2025, decreased $43 million, or 1%, from the same period in 2024, primarily due to lower volumes in amphibious assault ships at Ingalls, as well as cumulative catch-up adjustments on aircraft carrier construction and favorable contract adjustments and incentives in 2024 on the RCOH program at Newport News, partially offset by higher volumes in the Columbia class (SSBN 826) submarine program and the Virginia class (SSN 774) submarine program at Newport News, and surface combatants at Ingalls.
Current wording
Product sales for the nine months ended September 30, 2025, increased $268 million, or 5%, from the same period in 2024, primarily due to higher volumes in submarines at Newport News and surface combatants at Ingalls, partially offset by lower volumes in amphibious assault ships at Ingalls.
Previous wording
Service revenues for the three months ended June 30, 2025, increased $74 million, or 7%, from the same period in 2024, primarily due to higher volumes in surface combatants at Ingalls, and live, virtual, and constructive training solutions and C5ISR at Mission Technologies.
Current wording
Service revenues for the nine months ended September 30, 2025, increased $209 million, or 7%, from the same period in 2024, primarily due to higher volumes in surface combatants at Ingalls, live, virtual, and constructive training solutions and cyber, electronic warfare & space at Mission Technologies, and naval nuclear support services at Newport News.
Previous wording
Interest expense for thethree and six months ended June 30, 2025, was $28 million and $56 million, respectively, compared with $24 million and $45 million, respectively, for the same periods in 2024. The increase in interest expense for both periods was driven by an increase in outstanding long-term debt compared to the prior year periods.
Current wording
Interest expense for the nine months ended September 30, 2025, was $79 million, compared to $68 million for the same period in 2024. The increase in interest expense for the nine months ended September 30, 2025 was driven by an increase in outstanding long-term debt compared to the prior year period.
Previous wording
For thethree and six months ended June 30, 2025, the non-operating retirement benefit was $47 million and $95 million, respectively, compared with $46 million and $90 million, respectively, for the same periods in 2024. The favorable change in the non-operating retirement benefit for both periods was primarily driven by the amortization of net actuarial costs.
Current wording
For thethree and nine months ended September 30, 2025, the non-operating retirement benefit was $48 million and $143 million, respectively, compared with $44 million and $134 million, respectively, for the same periods in 2024. The favorable change in the non-operating retirement benefit for both periods was primarily driven by the amortization of net actuarial costs.
Previous wording
Other, net income for thethree and six months ended June 30, 2025, was $6 million and $12 million, respectively, compared with other, net income of $5 million and $12 million, respectively, for the same periods in 2024. For both periods, there were no individually significant drivers in other, net income.
Current wording
Other, net income for thethree and nine months ended September 30, 2025, was $18 million and $30 million, respectively, compared with other, net income of $9 million and $21 million, respectively, for the same periods in 2024. The increase in other, net income for both periods was primarily driven by an increase in unrealized gains on investments.
Previous wording
Our effective income tax rates on earnings from operations for the three months ended June 30, 2025 and 2024, were comparable at 19.1% and 19.9%, respectively. Our effective income tax rates on earnings from operations for the six months ended June 30, 2025 and 2024, were 19.7% and 18.5%, respectively. The higher effective tax rate for the six months ended June 30, 2025, was primarily attributable to excess tax benefits recognized on stock-based compensation recorded in the prior period.
Current wording
Our effective income tax rates on earnings from operations for the three months ended September 30, 2025 and 2024, were 28.9% and 9.8%, respectively. Our effective income tax rates on earnings from operations for the nine months ended September 30, 2025 and 2024, were 23.0% and 16.6%, respectively. The higher effective tax rates for thethree and nine months ended September 30, 2025, were primarily attributable to a reduction in the estimated research and development tax credits for the prior period recorded in the current period.
Previous wording
For each of thethree and six months ended June 30, 2025, our effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to research and development tax credits for the current periods.
Current wording
For each of thethree and nine months ended September 30, 2025, our effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to a reduction in the estimated research and development tax credits for the prior period recorded in the current period.
Previous wording
Total backlog as of June 30, 2025, and December 31, 2024, was $56.9 billion and $48.7 billion, respectively. Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer). Backlog excludes unexercised contract options and unfunded indefinite delivery/indefinite quantity orders. For contracts having no stated contract values, backlog includes only the amounts committed by the customer as of June 30, 2025 and December 31, 2024, respectively.
Current wording
Total backlog as of September 30, 2025, and December 31, 2024, was $55.7 billion and $48.7 billion, respectively. Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer). Backlog excludes unexercised contract options and unfunded indefinite delivery/indefinite quantity orders. For contracts having no stated contract values, backlog includes only the amounts committed by the customer as of September 30, 2025 and December 31, 2024, respectively.
Previous wording
We expect approximately 22% of the $48.7 billion total backlog as of December 31, 2024, to be converted into sales in 2025. U.S. Government orders comprised substantially all of the backlog as of June 30, 2025 and December 31, 2024.
Current wording
We expect approximately 21% of the $48.7 billion total backlog as of December 31, 2024, to be converted into sales in 2025. U.S. Government orders comprised substantially all of the backlog as of September 30, 2025 and December 31, 2024.
Previous wording
The value of new contract awards during the six months ended June 30, 2025, was approximately $14.0 billion, primarily driven by awards at Newport News and Ingalls, inclusive of a contract modification for construction of two additional Block VVirginia-class submarines.
Current wording
The value of new contract awards during the nine months ended September 30, 2025, was approximately $16.0 billion, primarily driven by awards at Newport News and Ingalls, inclusive of a contract modification for construction of two additional Block VVirginia-class submarines.
Previous wording
We seek to efficiently convert operating results into cash for deployment in operating our businesses, implementing our business strategy, and maximizing stockholder value. We use various financial measures to inform our capital deployment strategy, including net cash provided by (used in) operating activities and free cash flow. We believe these measures are useful to investors in assessing our financial performance.
Current wording
We seek to efficiently convert operating results into cash for deployment in operating our businesses, implementing our business strategy, and maximizing stockholder value. We use various financial measures to inform our capital deployment strategy, including net cash provided by operating activities and free cash flow. We believe these measures are useful to investors in assessing our financial performance.
Previous wording
The following table summarizes key components of cash flow provided by (used in) operating activities:
Current wording
The following table summarizes key components of cash flow provided by operating activities:
Previous wording
We discuss below our significant operating, investing, and financing activities affecting cash flows for the six months ended June 30, 2025 and 2024, as classified in our unaudited condensed consolidated statements of cash flows.
Current wording
We discuss below our significant operating, investing, and financing activities affecting cash flows for the nine months ended September 30, 2025 and 2024, as classified in our unaudited condensed consolidated statements of cash flows.
Previous wording
Cash provided by operating activities for the six months ended June 30, 2025, was $428 million, compared with cash used in operating activities of $211 million for the same period in 2024. The change in operating cash flow was primarily due to a favorable change in trade working capital driven by the timing of billings across programs and lower payments for income taxes.
Current wording
Cash provided by operating activities for the nine months ended September 30, 2025, was $546 million, compared with cash provided by operating activities of $2 million for the same period in 2024. The change in operating cash flow was primarily due to a favorable change in trade working capital driven by the timing of billings across programs and lower payments for income taxes.
Previous wording
We expect cash generated from operations in combination with our current cash and cash equivalents, as well as existing borrowing facilities, to be sufficient to service debt and retiree benefit plans, meet contractual obligations, and fund capital expenditures for at least the next 12 calendar months beginning July 1, 2025, and beyond such 12-month period based on our current business plans.
Current wording
We expect cash generated from operations in combination with our current cash and cash equivalents, as well as existing borrowing facilities, to be sufficient to service debt and retiree benefit plans, meet contractual obligations, and fund capital expenditures for at least the next twelve calendar months beginning October 1, 2025, and beyond such twelve-month period based on our current business plans.
Previous wording
Cash used in investing activities for the six months ended June 30, 2025, was $291 million, compared to $162 million used in investing activities for the same period in 2024. The change in investing cash was primarily driven by the acquisition of W International.
Current wording
Cash used in investing activities for the nine months ended September 30, 2025, was $387 million, compared to $238 million used in investing activities for the same period in 2024. The change in investing cash was primarily driven by the acquisition of W International.
Previous wording
Cash used in financing activities for the six months ended June 30, 2025, was $625 million, compared with $46 million used in financing activities for the same period in 2024. The change in cash used in financing activities was primarily due to a $440 million decrease in proceeds from our commercial paper program and a $271 million increase in repayments of long term debt, partially offset by a decrease of $127 million in common stock repurchases.
Current wording
Cash used in financing activities for the nine months ended September 30, 2025, was $678 million, compared with $184 million used in financing activities for the same period in 2024. The change in cash used in financing activities was primarily due to a $396 million decrease in proceeds from our commercial paper program and a $271 million increase in repayments of long term debt, partially offset by a decrease of $162 million in common stock repurchases.
Previous wording
Free cash flow represents cash provided by (used in) operating activities less capital expenditures net of related grant proceeds. Free cash flow is not a measure recognized under GAAP. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, net earnings as a measure of our performance or net cash provided by (used in) operating activities as a measure of our liquidity. We believe free cash flow is an important liquidity measure for our investors because it provides them insight into our current and period-to-period performance and our ability to generate cash from continuing operations. We also use free cash flow as a key operating metric in assessing the performance of our business and as a key performance measure in evaluating management performance and determining incentive compensation. Free cash flow may not be comparable to similarly titled measures of other companies.
Current wording
Free cash flow represents cash provided by operating activities less capital expenditures net of related grant proceeds. Free cash flow is not a measure recognized under GAAP. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, net earnings as a measure of our performance or net cash provided by operating activities as a measure of our liquidity. We believe free cash flow is an important liquidity measure for our investors because it provides them insight into our current and period-to-period performance and our ability to generate cash from continuing operations. We also use free cash flow as a key operating metric in assessing the performance of our business and as a key performance measure in evaluating management performance and determining incentive compensation. Free cash flow may not be comparable to similarly titled measures of other companies.
Previous wording
The following table reconciles net cash provided by (used in) operating activities to free cash flow:
Current wording
The following table reconciles net cash provided by operating activities to free cash flow:
Previous wording
Free cash flow for the six months ended June 30, 2025, increased $641 million from the same period in 2024, primarily due to a favorable change in trade working capital driven by the timing of billings across programs and lower payments for income taxes.
Current wording
Free cash flow for the nine months ended September 30, 2025, increased $521 million from the same period in 2024, primarily due to a favorable change in trade working capital driven by the timing of billings across programs and lower payments for income taxes.
Previous wording
In the ordinary course of business, we use letters of credit issued by commercial banks to support certain leases, insurance policies, and contractual performance obligations, as well as surety bonds issued by insurance companies principally to support our self-insured workers' compensation plans. As of June 30, 2025, $11 million in letters of credit were issued but undrawn and $380 million of surety bonds were outstanding. As of June 30, 2025, we had no other significant off-balance sheet arrangements.
Current wording
In the ordinary course of business, we use letters of credit issued by commercial banks to support certain leases, insurance policies, and contractual performance obligations, as well as surety bonds issued by insurance companies principally to support our self-insured workers' compensation plans. As of September 30, 2025, $11 million in letters of credit were issued but undrawn and $368 million of surety bonds were outstanding. As of September 30, 2025, we had no other significant off-balance sheet arrangements.
Previous wording
•significant delays or reductions in appropriations for our programs and/or changes in customer priorities and requirements (including government budgetary constraints, shifts in defense spending, and changes in customer short-range and long-range plans);
Current wording
•significant delays or reductions in appropriations for our programs and/or changes in customer priorities and requirements (including government budgetary constraints, government shutdowns, shifts in defense spending, and changes in customer short-range and long-range plans);