HUNTINGTON INGALLS INDUSTRIES, INC.

Previous wording

Huntington Ingalls Industries, Inc. ("HII", "we", "us", or "our") is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s seas, sky, land, space, and cyber. For more than a century, our Ingalls Shipbuilding segment ("Ingalls") in Mississippi and Newport News Shipbuilding segment ("Newport News") in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making us America's largest shipbuilder. Our Mission Technologies segment develops integrated technology solutions and products that enable today's connected, all-domain force. Headquartered in Newport News, Virginia, we employ approximately 45,000 people domestically and internationally.

Current wording

Huntington Ingalls Industries, Inc. ("HII", "we", "us", or "our") is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s seas, sky, land, space, and cyber. For more than a century, our Ingalls Shipbuilding segment ("Ingalls") in Mississippi and Newport News Shipbuilding segment ("Newport News") in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making us America's largest shipbuilder. Our Mission Technologies segment develops integrated technology solutions and products that enable today's connected, all-domain force. Headquartered in Newport News, Virginia, we employ approximately 46,000 people domestically and internationally.

Previous wording

Defense Spending Environment – The President submitted the fiscal year 2027 budget request on April 3, 2026, which is now under consideration by Congress. The budget request reflects continued investment in shipbuilding, recommending $60.2 billion in discretionary funding for the shipbuilding construction account and an additional $5.6 billion in mandatory funding, for a total of $65.8 billion for shipbuilding procurement. The discretionary request funds one Columbia class (SSBN 826) submarine, two Virginia class (SSN 774) submarines, one Arleigh Burke class (DDG 51) destroyer, one San Antonio class (LPD 17) amphibious transport dock ship, one America class (LHA 6) amphibious assault ship, and the first Frigate class (FF(X)) ship. The fiscal year 2027 budget request continues funding Gerald R. Ford class (CVN 78) aircraft carriers and aircraft carrier refueling programs, and provides initial advance procurement funding for the lead ship of the Trump class (BBG(X)) battleship program. The fiscal year 2027 budget request also reflects increased investments in capability enablers including unmanned surface and underwater vehicles.

Current wording

Defense Spending Environment – The President submitted the fiscal year 2027 budget request on April 3, 2026. The budget request reflects continued investment in shipbuilding, recommending $60.2 billion in discretionary funding for the shipbuilding construction account and an additional $5.6 billion in mandatory funding, for a total of $65.8 billion for shipbuilding procurement. The discretionary request funds one Columbia class (SSBN 826) submarine, two Virginia class (SSN 774) submarines, one Arleigh Burke class (DDG 51) destroyer, one San Antonio class (LPD 17) amphibious transport dock ship, one America class (LHA 6) amphibious assault ship, and the first Frigate class (FF(X)) ship. The fiscal year 2027 budget request continues funding Gerald R. Ford class (CVN 78) aircraft carriers and aircraft carrier refueling programs, and provides initial advance procurement funding for the lead ship of the Trump class (BBG(X)) battleship program. The fiscal year 2027 budget request also reflects increased investments in capability enablers including unmanned surface and underwater vehicles.

Previous wording

Congressional consideration of the fiscal year 2027 budget request began following its release and is ongoing. The House Appropriations Committee voted out a defense appropriations measure that supports the President’s topline budget request. The Senate Appropriations Committee has yet to conduct markups, and the timing of committee action remains uncertain. The House and Senate Armed Services Committees have each acted on their respective National Defense Authorization bills for fiscal year 2027. We cannot predict the outcome of the fiscal year 2027 budget process or whether a short-term funding measure will be provided in the event annual appropriations measures are not finalized by the October 1 start of the fiscal year.

Current wording

Congressional consideration of the fiscal year 2027 budget request began following its release and is ongoing. After passage by the House Armed Services Committee, the House of Representatives passed its version of the fiscal year 2027 National Defense Authorization bill. The Senate Armed Services Committee passed its version of the National Defense Authorization bill, but the full Senate has yet to complete action on the legislation. The House Appropriations Committee approved a defense appropriations measure that supports the President’s topline discretionary budget request. The Senate Appropriations Committee has yet to conduct markups, and the timing of committee action remains uncertain. Annual appropriations for the Federal government have yet to be finalized, and the U.S. Government is currently operating under a Continuing Resolution which funds government operations through December 11, 2026.

Previous wording

As of June 30, 2026, Frigate class (FF(X)) ships are included in the Glossary of Programs in this section. Frigate class (FF(X)) ships are included as part of surface combatants described Part I, Item 1 in the 2025 Annual Report on Form 10-K.

Current wording

As of June 30, 2026, Frigate class (FF(X)) ships are included in the Glossary of Programs in this section. Frigate class (FF(X)) ships are included as part of surface combatants described in Part I, Item 1 in the 2025 Annual Report on Form 10-K.

Previous wording

Sales and service revenues for the three months ended June 30, 2026, increased $336 million, or 11%, compared to the same period in 2025, primarily due to higher volumes at Newport News and Ingalls. Sales and service revenues for the six months ended June 30, 2026, increased $701 million, or 12%, compared to the same period in 2025, primarily due to higher volumes at Newport News and Ingalls.

Current wording

Sales and service revenues for the three months ended September 30, 2026, increased $345 million, or 11%, compared to the same period in 2025, primarily due to higher volumes at Newport News and Ingalls. Sales and service revenues for the nine months ended September 30, 2026, increased $1,046 million, or 12%, compared to the same period in 2025, primarily due to higher volumes at Newport News and Ingalls.

Previous wording

For thethree and six months ended June 30, 2026 and 2025, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:

Current wording

For thethree and nine months ended September 30, 2026 and 2025, favorable and unfavorable cumulative catch-up revenue adjustments were as follows:

Previous wording

See Note 6: Revenue and Segment Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.

Current wording

See Note 6: Revenue in Part I, Item 1 and Segment Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.

Previous wording

General and administrative expenses for thethree and six months ended June 30, 2026 increased $1 million and $13 million, respectively, from the same periods in 2025, primarily due to higher non-current state income taxes.

Current wording

General and administrative expenses for thethree and nine months ended September 30, 2026 increased $12 million and $25 million, respectively, from the same periods in 2025, primarily due to higher overhead costs.

Previous wording

The FAS/CAS Adjustment reflects the difference between expenses for pension and other postretirement benefits determined in accordance with GAAP ("FAS") and the expenses for these items included in segment operating income in accordance with U.S. Cost Accounting Standards ("CAS"). The Operating FAS/CAS Adjustment excludes the following components of net periodic benefit costs: interest cost, expected return on plan assets, amortization of prior service cost (credit) and actuarial loss (gain), and settlement and curtailment effects.

Current wording

The FAS/CAS Adjustment reflects the difference between expenses for pension and other postretirement benefits determined in accordance with GAAP ("FAS") and the expenses for these items included in segment operating income in accordance with U.S. Cost Accounting Standards ("CAS"). The Operating FAS/CAS Adjustment excludes the following components of net periodic benefit cost: interest cost, expected return on plan assets, amortization of prior service cost (credit) and actuarial loss (gain), and settlement and curtailment effects.

Previous wording

The Operating FAS/CAS Adjustment was a net expense of $8 million and $6 million for the three months ended June 30, 2026 and 2025, respectively. The Operating FAS/CAS Adjustment was a net expense of $17 million and $16 million for the six months ended June 30, 2026 and 2025, respectively. The unfavorable change in the Operating FAS/CAS Adjustment for each period was primarily driven by higher asset returns in 2025.

Current wording

The Operating FAS/CAS Adjustment was a net expense of $12 million and $9 million for the three months ended September 30, 2026 and 2025, respectively. The Operating FAS/CAS Adjustment was a net expense of $29 million and $25 million for the nine months ended September 30, 2026 and 2025, respectively. The unfavorable change in the Operating FAS/CAS Adjustment for each period was primarily driven by higher asset returns in 2025.

Previous wording

Non-current state income tax expense was $6 million and $3 million for the three months ended June 30, 2026 and 2025, respectively. The unfavorable change in non-current state income taxes was driven by an increase in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures.

Current wording

Non-current state income tax expense was $4 million and $9 million for the three months ended September 30, 2026 and 2025, respectively. The favorable change in non-current state income taxes was driven by a decrease in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures.

Previous wording

Non-current state income tax expense was $14 million and $3 million for the six months ended June 30, 2026 and 2025, respectively. The unfavorable change in non-current state income taxes was driven by an increase in deferred state income tax expense, primarily attributable to a change in net capitalized research and development expenditures and a change in state unrecognized tax benefits for the prior period.

Current wording

Non-current state income tax expense was $18 million and $12 million for the nine months ended September 30, 2026 and 2025, respectively. The unfavorable change in non-current state income taxes was driven by an increase in deferred state income tax expense, primarily attributable to a change in state unrecognized tax benefits for the prior period and a change in deferred taxes associated with pension accounting.

Previous wording

Our discussion of business segment performance focuses on sales and service revenues and operating income, consistent with our approach for managing our business. We are aligned into three reportable segments: Ingalls, Newport News, and Mission Technologies.

Current wording

Our discussion of business segment performance focuses on sales and service revenues and operating income, consistent with our approach for managing our business. We are organized into three reportable segments: Ingalls, Newport News, and Mission Technologies.

Previous wording

For thethree and six months ended June 30, 2026 and 2025, net cumulative catch-up revenue adjustments by segment were as follows:

Current wording

For thethree and nine months ended September 30, 2026 and 2025, net cumulative catch-up revenue adjustments by segment were as follows:

Previous wording

See Note 6: Revenue and Consolidated Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.

Current wording

See Note 6: Revenue in Part I, Item 1 and Consolidated Operating Results in this section for additional information on our net cumulative catch-up revenue adjustments.

Previous wording

Ingalls segment operating income for the six months ended June 30, 2026, was $107 million, compared to segment operating income of $100 million for the same period in 2025. The increase was primarily driven by higher volumes in amphibious assault ships and surface combatants, partially offset by contract adjustments in surface combatants in 2025.

Current wording

Ingalls segment operating income for the three months ended September 30, 2026, was $59 million, compared to segment operating income of $65 million for the same period in 2025. The decrease was primarily driven by lower performance in surface combatants.

Previous wording

Ingalls segment operating income for the three months ended June 30, 2026, was $58 million, compared to segment operating income of $54 million for the same period in 2025. The increase was primarily driven by higher volumes in amphibious assault ships, partially offset by contract adjustments in surface combatants in 2025.

Current wording

Ingalls segment operating income for the nine months ended September 30, 2026, was $166 million, compared to segment operating income of $165 million for the same period in 2025. The increase was primarily driven by the higher volumes described above, partially offset by contract adjustments in surface combatants in 2025.

Previous wording

Newport News revenues, including intersegment sales, for the three months ended June 30, 2026, increased $246 million, or 15%, from the same period in 2025, primarily driven by higher volumes in aircraft carriers and submarines.

Current wording

Newport News revenues, including intersegment sales, for the three months ended September 30, 2026, increased $293 million, or 18%, from the same period in 2025, primarily driven by higher volumes in submarines and aircraft carriers.

Previous wording

Newport News revenues, including intersegment sales, for the six months ended June 30, 2026, increased $515 million, or 17%, from the same period in 2025, primarily driven by higher volumes in aircraft carriers and submarines.

Current wording

Newport News revenues, including intersegment sales, for the nine months ended September 30, 2026, increased $808 million, or 18%, from the same period in 2025, primarily driven by higher volumes in aircraft carriers and submarines.

Previous wording

Newport News segment operating income for the three months ended June 30, 2026, was $111 million, compared to segment operating income of $82 million for the same period in 2025. The increase was primarily driven by contract adjustments and incentives in aircraft carriers and the higher volumes described above, partially offset by lower performance in aircraft carriers.

Current wording

Newport News segment operating income for the three months ended September 30, 2026, was $132 million, compared to segment operating income of $80 million for the same period in 2025. The increase was primarily driven by contract adjustments and incentives in the Virginia class (SSN 774) submarine program and the higher volumes described above.

Previous wording

Newport News segment operating income for the six months ended June 30, 2026, was $199 million, compared to segment operating income of $167 million for the same period in 2025. The increase was primarily driven by contract adjustments and incentives in aircraft carriers and the higher volumes described above, partially offset by lower performance in aircraft carriers.

Current wording

Newport News segment operating income for the nine months ended September 30, 2026, was $331 million, compared to segment operating income of $247 million for the same period in 2025. The increase was primarily driven by contract adjustments and incentives in the Virginia class (SSN 774) submarine program and aircraft carriers and the higher volumes described above.

Previous wording

Mission Technologies revenues, including intersegment sales, for the three months ended June 30, 2026, decreased $31 million, or 4%, from the same period in 2025, primarily due to lower volumes in All-Domain Operations and Global Security, partially offset by higher volumes in Warfare Systems and Unmanned Systems.

Current wording

Mission Technologies revenues, including intersegment sales, for the three months ended September 30, 2026, increased $5 million, or 1%, from the same period in 2025, primarily due to higher volumes in Unmanned Systems, partially offset by lower volumes in Global Security.

Previous wording

Mission Technologies revenues, including intersegment sales, for the six months ended June 30, 2026, decreased $18 million, or 1%, from the same period in 2025, primarily due to lower volumes in All-Domain Operations and Global Security, partially offset by higher volumes in Warfare Systems and Unmanned Systems.

Current wording

Mission Technologies revenues, including intersegment sales, for the nine months ended September 30, 2026, decreased $13 million, or 1%, from the same period in 2025, primarily due to lower volumes in Global Security and All-Domain Operations, partially offset by higher volumes in Unmanned Systems and Warfare Systems.

Previous wording

Mission Technologies segment operating income for the three months ended June 30, 2026, was $55 million, compared to segment operating income of $36 million for the same period in 2025. The increase was primarily due to higher equity income from nuclear and environmental joint ventures.

Current wording

Mission Technologies segment operating income for the three months ended September 30, 2026, was $71 million, compared to segment operating income of $34 million for the same period in 2025. The increase was primarily due to a successful milestone achievement and higher volumes in Unmanned Systems and higher equity income from nuclear and environmental joint ventures.

Previous wording

Mission Technologies segment operating income for the six months ended June 30, 2026, was $90 million, compared to segment operating income of $76 million for the same period in 2025. The increase was primarily due to lower purchased intangible amortization, higher performance in Warfare Systems, and higher equity income from nuclear and environmental joint ventures.

Current wording

Mission Technologies segment operating income for the nine months ended September 30, 2026, was $161 million, compared to segment operating income of $110 million for the same period in 2025. The increase was primarily due to a successful milestone achievement and higher volumes in Unmanned Systems, higher equity income from nuclear and environmental joint ventures, and lower purchased intangible amortization.

Previous wording

Product sales for the three months ended June 30, 2026, increased $314 million, or 16%, from the same period in 2025, primarily due to higher volumes in aircraft carriers and submarines at Newport News, and amphibious assault ships at Ingalls.

Current wording

Product sales for the three months ended September 30, 2026, increased $365 million, or 18%, from the same period in 2025, primarily due to higher volumes in submarines and aircraft carriers at Newport News, and amphibious assault ships at Ingalls.

Previous wording

Product sales for the six months ended June 30, 2026, increased $605 million, or 16%, from the same period in 2025, primarily due to higher volumes in aircraft carriers and submarines at Newport News, and amphibious assault ships and surface combatants at Ingalls.

Current wording

Product sales for the nine months ended September 30, 2026, increased $970 million, or 17%, from the same period in 2025, primarily due to higher volumes in aircraft carriers and submarines at Newport News, and amphibious assault ships and surface combatants at Ingalls.

Previous wording

Segment cost of product sales for the three months ended June 30, 2026, increased $287 million, or 17%, compared with the same period in 2025, primarily due to the higher volumes described above.

Current wording

Segment cost of product sales for the nine months ended September 30, 2026, increased $861 million, or 17%, compared with the same period in 2025, primarily due to the higher volumes described above.

Previous wording

Service revenues for the three months ended June 30, 2026, increased $22 million, or 2%, from the same period in 2025, primarily due to higher volumes in naval nuclear support services and aircraft carriers at Newport News, and higher volumes in Warfare Systems at Mission Technologies, partially offset by lower volumes in All-Domain Operations and Global Security at Mission Technologies.

Current wording

Service revenues for the nine months ended September 30, 2026, increased $76 million, or 2%, from the same period in 2025, primarily due to higher volumes in naval nuclear support services and aircraft carriers at Newport News, and Warfare Systems at Mission Technologies, partially offset by lower volumes in Global Security and All-Domain Operations at Mission Technologies.

Previous wording

Interest expense for the three months ended June 30, 2026, was $27 million, compared to $28 million for the same period in 2025.

Current wording

Interest expense for the three months ended September 30, 2026, was $26 million, compared to $23 million for the same period in 2025. The increase in interest expense was driven by an increase in commercial paper borrowings compared to the prior year period.

Previous wording

Interest expense for the six months ended June 30, 2026, was $49 million, compared to $56 million for the same period in 2025. The decrease in interest expense was driven by a decrease in outstanding long-term debt compared to the prior year period.

Current wording

Interest expense for the nine months ended September 30, 2026, was $75 million, compared to $79 million for the same period in 2025. The decrease in interest expense was driven by a decrease in outstanding long-term debt compared to the prior year period.

Previous wording

The non-operating retirement benefit includes the following components of net periodic benefit costs: interest cost, expected return on plan assets, amortization of prior service cost (credit) and actuarial loss (gain), and settlement and curtailment effects.

Current wording

The non-operating retirement benefit includes the following components of net periodic benefit cost: interest cost, expected return on plan assets, amortization of prior service cost (credit) and actuarial loss (gain), and settlement and curtailment effects.

Previous wording

For thethree and six months ended June 30, 2026, the non-operating retirement benefit was $53 million and $106 million, respectively, compared with $47 million and $95 million, respectively, for the same periods in 2025. The favorable change in the non-operating retirement benefit for both periods was primarily driven by higher asset returns in 2025.

Current wording

For thethree and nine months ended September 30, 2026, the non-operating retirement benefit was $53 million and $159 million, respectively, compared with $48 million and $143 million, respectively, for the same periods in 2025. The favorable change in the non-operating retirement benefit for both periods was primarily driven by higher asset returns in 2025.

Previous wording

Other, net income for thethree and six months ended June 30, 2026, was $18 million and $20 million, respectively, compared with other, net income of $6 million and $12 million, respectively, for the same periods in 2025. The increase in other, net income for both periods was primarily driven by an increase in unrealized gains on investments.

Current wording

Other, net income for thethree and nine months ended September 30, 2026, was $2 million and $22 million, respectively, compared with other, net income of $18 million and $30 million, respectively, for the same periods in 2025. The decrease in other, net income for both periods was primarily driven by a decrease in unrealized gains on investments.

Previous wording

Our effective income tax rates on earnings from operations for the three months ended June 30, 2026 and 2025, were 18.1% and 19.1%, respectively. Our effective income tax rates on earnings from operations for the six months ended June 30, 2026 and 2025, were 19.2% and 19.7%, respectively. The lower effective tax rates for thethree and six months ended June 30, 2026, were primarily attributable to income tax benefits associated with stock award settlement activity.

Current wording

Our effective income tax rates on earnings from operations for the three months ended September 30, 2026 and 2025, were 21.1% and 28.9%, respectively. Our effective income tax rates on earnings from operations for the nine months ended September 30, 2026 and 2025, were 19.9% and 23.0%, respectively. The lower effective tax rate for the three months ended September 30, 2026, was primarily attributable to a reduction in the estimated research and development tax credits recorded in the prior period. The lower effective tax rate for the nine months ended September 30, 2026, was primarily attributable to a reduction in the estimated research and development tax credits recorded in the prior period and income tax benefits associated with stock award settlement activity recorded in the current period.

Previous wording

For each of thethree and six months ended June 30, 2026, our effective tax rates differed from the federal statutory corporate income tax rate of 21% primarily due to income tax benefits associated with stock award settlement activity.

Current wording

For the three months ended September 30, 2026, our effective tax rate did not differ materially from the federal statutory corporate income tax rate of 21%. For the nine months ended September 30, 2026, our effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to income tax benefits associated with stock award settlement activity.

Previous wording

Total backlog as of June 30, 2026, and December 31, 2025, was $57.3 billion and $53.1 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, 2026 and December 31, 2025, respectively.

Current wording

Total backlog as of September 30, 2026, and December 31, 2025, was $86.2 billion and $53.1 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, 2026 and December 31, 2025, respectively.

Previous wording

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.

Current wording

The value of new contract awards during the nine months ended September 30, 2026, was approximately $43.1 billion, primarily driven by awards for the construction of nine Block VIVirginia class (SSN 774) submarines and five Build IIColumbia class (SSBN 826) 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, a liquidity measure not calculated in accordance with GAAP.

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 net cash provided by operating activities: