Huntington Ingalls Industries (HII) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenues were $2.73 billion, down 2.5%–3% year-over-year, with net earnings of $149 million and diluted EPS of $3.79, both slightly lower than Q1 2024.

• Operating income rose to $161 million (up 4.5%–5%), and segment operating income was $171 million, with margin improvements in Mission Technologies and Newport News, offset by Ingalls.

• Backlog remained strong at $48 billion as of March 31, 2025, with $2.1 billion in new contract awards and 22% expected to convert to sales in 2025.

• Strategic focus on throughput, cost reduction, and alignment with defense priorities, including new facility acquisitions and technology contracts.

• Largest U.S. military seapower provider, targeting over $50 billion in contract awards in the next 20 months.

Financial highlights

• Q1 2025 revenue was $2.73 billion, down from $2.81 billion in Q1 2024, with product sales down 4% and service revenues flat.

• Segment operating income was $171 million (6.3% margin), up from $170 million (6.1%) year-over-year.

• Consolidated operating income rose to $161 million, with an operating margin of 5.9% versus 5.5% last year.

• Free cash flow was negative $462 million, down from negative $274 million in Q1 2024, mainly due to working capital changes.

• Net capital expenditures were $67 million, or 2.5% of revenues.

Outlook and guidance

• FY25 shipbuilding revenue expected at $8.9–$9.1 billion, with operating margin of 5.5%–6.5%.

• Mission Technologies revenue guidance: $2.9–$3.1 billion, with segment margin 4.0%–4.5% and EBITDA margin 8.0%–8.5%.

• FY25 free cash flow projected at $300–$500 million; capital expenditures expected at 3.0%–4.0% of annual revenues.

• Q2 2025 shipbuilding revenue expected at ~$2.2 billion, with margin near the low end of annual range.

• Mid- to long-term revenue growth targeted at 4%+ CAGR, aiming for $15 billion revenue by 2030.