Oct 29, 2026 earnings call — Record sales and large contract awards
HII reported record Q3 sales of $3.5 billion and secured over $32 billion in new contract awards.
Revenue $3.5B (est $3.4B) · EPS $5.48 (est $4.36) · Next-quarter revenue outlook $10.5B–$10.7B
Key quotes
"Shipbuilding throughput has increased approximately 9% year to date over 2025."
"Beginning with our consolidated results on slide four of the presentation, new contract awards in the quarter totaled $32.4 billion and brought total backlog to $86.2 billion."
"Building on our advanced maritime autonomy, we also received an award for 10 ROMULUS 150-foot USVs under the Navy's MUSV program with multiple hulls already in production at our partner shipyards, Breaux Brothers and Halimar."
Analyst Q&A 8
Shipyard labor and submarine cadence
Q (Scott Mikus · Melius): Is there a risk many new shipyards will compete for the same workers? Also, can the Navy reach the two-plus-one submarine production rate sooner given your progress?
A: Management said shipbuilding hires are local and the announced yards are not near HII, so they should draw different labor pools. They will try to accelerate submarine production; 800 is on schedule and the second Columbia is improving on cost and schedule, but they would not forecast a faster overall recovery now.
"What you need to understand about shipbuilding is it's pretty local." — Chris Kastner (CEO)
Revenue growth outlook and margins
Q (John Godyn · Citi): Should the company keep the 6% multi-year revenue CAGR given recent strong quarters? Also, how should we think about shipbuilding margin improvement over the next few years?
A: Management said they will update or discuss the revenue guide on the year-end call but are comfortable keeping the current multi-year 6% guide for now. They expect margins and cash to incrementally improve each year and still see shipbuilding returning around 9%-10% on sales over time.
"I still expect this business should be 9%-10% return on sales and shipbuilding." — Chris Kastner (CEO)
Newport News accounting and margins
Q (Noah Poponak · Goldman Sachs): Did the quarter reflect all EAC adjustments for submarine contracts, and what is the underlying current margin at Newport News and how will it progress into Q4?
A: Management said there were many moving parts in the quarter—awards, incentives, statements of work and funding—which affected bookings and made run-rate calculation difficult. They expect those contract mods and accounting items to settle in Q4; currently Ingalls has been in the low sevens and Newport News around 6%.
"That will settle down in Q4 with the mod and the homework behind us." — Tom Stiehle (CFO)
CapEx and frigate schedule
Q (Seth Seifman · JPMorgan): Why did CapEx guidance come down this year and what drives the bridge to next year? Also, is the frigate still on track to be afloat by 2028?
A: Tom said CapEx guidance is $500 million in the presentation and higher revenue has reduced CapEx as a percent of sales, with better collections and working capital unwinds helping cash. Chris said the frigate program is on schedule, manufacturers and units are in production, CDR and PRR passed, and they need to get the contract in Q1 to meet the 2028 goal.
"We passed the CDR and PRR, so we're continuing to meet our commitments relative to getting that boat in the water by the end of 2028." — Chris Kastner (CEO)
Pre- vs post-COVID revenue mix and CVN-79
Q (Ben Thomas · Wells Fargo): What is the 2026 mix of pre-COVID versus post-COVID work and how will that shift by end of 2027? Also, what remains before final delivery of CVN-79 Kennedy?
A: Tom said by the end of 2027 they expect marginally more post-COVID work, around 50%-55% post-COVID versus pre-COVID, and that mix will continue to shift down by 8-10 points toward the end of the decade. Chris said Kennedy is progressing well, teams are finishing final systems, there are no special milestones to watch and they need to complete work to deliver the ship.
"By the end of 2027, we should have more post-COVID work, marginally more, 50%-55% post-COVID work than pre-COVID work." — Tom Stiehle (CFO)
Throughput target and free cash flow outlook
Q (Gautam Khanna · TD Cowen): Is the throughput target changed since year-to-date is 9% versus the 15% target, and what drives Q4 cash and 2027 free cash flow lumpiness?
A: Chris said there is no update to the target but they are trending a bit south toward year end, with Newport News doing well and Ingalls slower early in the year. Tom said the 9% is already reflected in EACs and forecasts; Q4 cash is driven by collections, ship deliveries, contract actions and incentives, and an IRS approval is expected to help lift cash next year as well; they reiterated the free cash flow guide for next year.
"We are trending a bit south of that towards the end of the year." — Chris Kastner (CEO)
Unmanned systems versus big ships
Q (Ron Epstein · BofA): How will unmanned and autonomous vessels team with large ships, and what share of HII's business might unmanned represent in 5–10 years?
A: Chris said unmanned systems are already north of $200 million this year with margins above Mission Technologies and that HII will remain a major capital-ship builder. Andy said HII has long experience with UUVs and USVs, is delivering MUSV vessels in partnership, has a strong autonomy stack, and sees unmanned craft augmenting and extending legacy ships rather than replacing them.
"We view it as a very natural extension of what we do here at HII." — Andy Green (PRESIDENT)
Ingalls performance and new battleship program
Q (Emilee Deutchman · Wolfe): Is the weaker Ingalls surface combatant performance isolated to specific hulls or across the program? And how do you view the program risk for the new battleship concept?
A: Tom said the drag was against the destroyers while they get engineering and parts into a rhythm, and noted Ingalls is handling three ships in integration and test with return-on-sales around 6.7–6.9, describing the quarter as fairly steady. Chris said the new battleship work is in initial planning and design, it is in the budget, and HII will build what the Navy asks them to build.
"It's in the budget. Ultimately, we're going to build what they ask us to build." — Chris Kastner (CEO)