Huntington Ingalls Industries on Thursday posted first quarter declines in its top and bottom-lines driven by lower sales across the company’s operating segments, and higher interest expense and taxes.
Net income fell nearly 3% to $149 million, $3.79 earnings per share (EPS), from $153 million ($3.87 EPS) a year ago. The results handily topped consensus estimates of $2.88 EPS.
Higher interest expense and taxes more than offset higher operating income, which was up on work at the Mission Technologies and Newport News Shipbuilding Segments. Mission Technologies benefited from performance on cyber, electronic warfare, space, and unmanned systems while Newport News’ income increased on contract incentives for the Navy’s Virginia-class nuclear attack submarine program, and volume on the Columbia-class nuclear missile submarine.
Segment operating margin increased 20 basis point improvement to 6.3%.
Sales also dipped nearly 3% to $2.7 billion from $2.8 billion a year ago. The company registered declines in amphibious assault ships, aircraft carriers and Naval nuclear support services.
The first quarter results were significantly better than Huntington Ingalls Industries’ (HII) 2024 fourth quarter, which saw a steep drop in net income and a modest decline in sales.
HII maintained its outlook for 2025, with sales forecast to be between $11.8 billion and $12.2 billion. Guidance for operating margin in the shipbuilding business remains between 5.5 and 6.5 percent, and between 4-4.5% at Mission Technologies.
HII continues to expect more than $50 billion in contract awards through the end of 2026, some of which it has already received, driving at least 4% annual growth to be at $15 billion in sales in 2030.
On Wednesday evening, the Navy awarded HII $1.3 billion for the company’s work on two Block V Virginia-class subs. General Dynamics, the prime contractor for the program, received $12.4 billion for the two subs, with options that would increase the value to $17.2 billion.
The Navy’s goal is ultimately to acquire two Virginia-class vessels annually, although current production rates hover just above one per year.
The company tallied $2.1 billion in orders and backlog stood at $48 billion, down a percent from $48.7 billion at the end of 2024. Free cash was a $482 million outflow in the quarter but cash guidance for the year is still between $300 million and $500 million.
