Huntington Ingalls Industries (HII) on Thursday reported a drop in second quarter net earnings despite higher sales largely due to lower performance on the Virginia-class submarine program and aircraft carrier construction at the Newport News Shipbuilding segment.
Net income fell 12% to $152 million, $3.86 earnings per share (EPS), from $173 million ($4.38 EPS) a year ago, still beating consensus estimates by 57 cents per share. Net income is down nearly 8% so far this year, according to this week’s earnings report.
Sales increased 4% to $3.1 billion from $3 billion a year ago, and through the first half of 2025 are up less than a percent.
Throughput improved at Newport News and the Ingalls Shipbuilding division during the quarter and is expected to accelerate in the second half of the year, Chris Kastner, HII’s president and CEO, said on Thursday’s earnings call to investors. Trends around hiring and retention are also positive, he said.
“Also, the industrial base is expanding with significant outsourcing taking place, increasing the capacity of the shipbuilding industry as a whole, and our technology efforts to increase efficiency are off to a strong start,” Kastner said.
Ingalls also contributed to the earnings decline on lower performance and contract incentives for amphibious assault ships. Operating income at Mission Technologies was flat.
All three segments contributed to the higher sales driven partly by higher volume on the Columbia and Virginia-class submarine programs.
Asked by one analyst about impacts to Mission Technologies from the Donald Trump administration’s Department of Government Efficiency efforts, Kastner replied that “there has been some minor restructuring of contracts which would potentially impact” 2026 results, adding “there has been a slowing of awards and activity” even though the opportunity pipeline is still “very strong at over $90 billion.”
Orders in the quarter were strong at $11.9 billion, helping drive backlog to a record $56.9 billion, up 17% from $48.7 billion at the end of 2024.
The company still expects awards later this year for Block VI Virginia-class submarines and the second Columbia vessel, Kastner said. Negotiations for the contracts have begun, he said. If the awards are delayed until 2026, that will be a headwind on 2025 results, Tom Stiehle, HII’s chief financial officer, said on the call.
Exchange Monitor affiliate Defense Daily originally published this story.