# Huntington Ingalls Industries (HII) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/HII/thesis · /stocks/HII/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: HII
step: "04"
title: Financial Snapshot — 3-Year P&L Summary
created: 2026-05-29
---

### Step 04 — Financial Snapshot

#### Annual Income Statement Summary (FY 2022-2024)

All figures in millions USD unless noted.

| Line Item | FY 2022 | FY 2023 | FY 2024 |
|-----------|---------|---------|---------|
| **Revenue** | $10,674 | $11,074 | $11,151 |
| YoY Growth | — | +3.7% | +0.7% |
| **Cost of Revenue** | $9,802 | $10,064 | $10,184 |
| **Gross Profit** | $872 | $1,010 | $967 |
| Gross Margin | 8.2% | 9.1% | 8.7% |
| **SG&A + Other OpEx** | ~$250 | ~$270 | ~$280 |
| **Operating Income (EBIT)** | ~$622 | ~$740 | ~$687 |
| EBIT Margin | 5.8% | 6.7% | 6.2% |
| Interest Expense | ~($155) | ~($160) | ~($165) |
| Other Income/Expense | ~$15 | ~$20 | ~$10 |
| **Pre-tax Income** | ~$482 | ~$600 | ~$532 |
| Tax Provision | ~($112) | ~($135) | ~($120) |
| Effective Tax Rate | ~23% | ~23% | ~23% |
| **Net Income** | ~$370 | ~$465 | ~$412 |
| Net Margin | 3.5% | 4.2% | 3.7% |
| **Diluted Shares Outstanding** | ~39.2M | ~38.5M | ~37.8M |
| **Diluted EPS** | ~$9.45 | ~$12.09 | ~$10.90 |

*Note: Figures are approximate based on public filings and earnings disclosures. FY 2024 was impacted by unfavorable EAC adjustments at Newport News.*

#### Segment Operating Income Detail

| Segment | FY 2022 Revenue | FY 2022 Op Inc | Margin | FY 2023 Revenue | FY 2023 Op Inc | Margin | FY 2024 Revenue | FY 2024 Op Inc | Margin |
|---------|----------------|----------------|--------|----------------|----------------|--------|----------------|----------------|--------|
| Newport News | ~$6,250 | ~$500 | ~8.0% | ~$6,450 | ~$580 | ~9.0% | ~$6,590 | ~$475 | ~7.2% |
| Ingalls | ~$3,120 | ~$290 | ~9.3% | ~$3,240 | ~$310 | ~9.6% | ~$3,130 | ~$260 | ~8.3% |
| Mission Technologies | ~$1,050 | ~$30 | ~2.9% | ~$1,130 | ~$35 | ~3.1% | ~$1,180 | ~$38 | ~3.2% |
| Intersegment/Corporate | — | ~$(198) | — | — | ~$(185) | — | — | ~$(186) | — |
| **Total** | ~$10,420 | ~$622 | ~6.0% | ~$10,820 | ~$740 | ~6.8% | ~$10,900 | ~$587 | ~5.4% |

*Note: Intersegment/corporate includes pension-related costs, unallocated G&A, and other items that are material for HII given its large legacy pension obligations.*

#### Key Profitability Observations

##### Gross Margin Analysis
HII's gross margins are thin (8-10%) relative to defense primes like Lockheed Martin (12-15% gross margin) or Northrop Grumman (15-18%). This reflects the cost-plus nature of shipbuilding and the labor/materials-intensive production process. Gross margin improvement requires:
1. Better fixed-price contract execution (reducing overruns)
2. Workforce productivity improvements (output per employee-hour)
3. Favorable EAC revisions on ongoing programs

##### EAC Adjustment Impact
In FY 2024, Newport News segment experienced notable unfavorable EAC adjustments, primarily on the Virginia-class submarine program and certain carrier programs. EAC adjustments can create a $50-200M swing in quarterly or annual earnings — this is the primary source of HII's "noisy" earnings.

- FY 2022: Net EAC adjustments approximately neutral to slightly positive
- FY 2023: Net EAC adjustments approximately $50-100M favorable (helped margin)
- FY 2024: Net EAC adjustments meaningfully unfavorable (NNS segment)

##### Pension Costs
HII has a significant legacy defined-benefit pension obligation — a legacy of its Northrop Grumman heritage and decades of unionized shipbuilding workforce. Pension-related costs (both non-cash amortization and interest costs) flow through "unallocated pension" in the segment reconciliation and can be $100-200M+ annually. This is a structural headwind not present in most defense IT competitors.

#### EBITDA and Adjusted Metrics

| Metric | FY 2022 | FY 2023 | FY 2024 |
|--------|---------|---------|---------|
| EBIT | ~$622 | ~$740 | ~$687 |
| D&A | ~$280 | ~$295 | ~$310 |
| EBITDA | ~$902 | ~$1,035 | ~$997 |
| EBITDA Margin | 8.5% | 9.3% | 8.9% |
| Adj. EBITDA* | ~$950 | ~$1,090 | ~$1,050 |

*Adjusted for non-recurring items and pension remeasurement charges.

#### EPS Trend Analysis

| Period | Diluted EPS | Notes |
|--------|------------|-------|
| FY 2020 | ~$11.40 | Pre-COVID normalized |
| FY 2021 | ~$8.64 | COVID workforce disruption, unfavorable EACs |
| FY 2022 | ~$9.45 | Recovery; Alion integration |
| FY 2023 | ~$12.09 | Strong year; favorable EACs at NNS |
| FY 2024 | ~$10.90 | NNS headwinds; weaker free cash flow |

The EPS trajectory reflects the lumpy, EAC-driven nature of shipbuilding earnings. The "true" underlying earnings power is better assessed over 3-5 year averaging periods. HII's management has consistently communicated a path to $12-15 EPS range on a normalized basis.

#### Revenue and Earnings Quality Notes

1. **Revenue quality is high**: 100% government contracts with sovereign counterparty; no receivables risk
2. **Earnings quality is variable**: EAC adjustments and pension accounting can obscure underlying operations
3. **Cash conversion**: FCF conversion from net income is inconsistent (see capital allocation step); working capital in long-cycle programs can create cash timing mismatches
4. **Non-GAAP adjustments**: Management presents adjusted metrics excluding pension amortization and non-recurring charges; appropriate to use when modeling normalized earnings power

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/HII/fundamental

## Navigation

- Overview: /stocks/HII
- Financials (this page): /stocks/HII/financials
- Thesis: /stocks/HII/thesis
- Investment Memo: /stocks/HII/memo
- Coverage universe: /stocks