Huntington Ingalls (HII) Q3 2025: Revenue Soars on Newport News Turnaround

Huntington Ingalls Industries (HII), the nation's largest military shipbuilder, is a cornerstone of U.S. naval power, responsible for constructing everything from nuclear-powered aircraft carriers and submarines to amphibious assault ships. To understand the health of this critical defense contractor, we're diving into its third-quarter financial results for 2025, detailed in its recent 10-Q filing with the SEC. The report reveals a period of significant growth in both revenue and profitability, largely driven by a remarkable turnaround in its most prominent division.

For the third quarter ending September 30, 2025, HII reported a 16% increase in sales and service revenues, climbing to $3.2 billion from $2.7 billion in the same period last year. More impressively, operating income nearly doubled, jumping 96% to $161 million. This robust performance translated into net earnings of $145 million, or $3.68 per diluted share, a solid increase from last year's $101 million.

To visualize how the company's revenues flowed through its costs to generate profit during the quarter, the following diagram breaks down the key components of the income statement.

A Tale of Two Shipyards (and a Tech Division)

HII's performance is best understood by looking at its three main business segments. The standout this quarter was Newport News, the segment responsible for building and overhauling the U.S. Navy's nuclear-powered aircraft carriers and submarines.

• Newport News saw its revenue grow 15% to $1.6 billion. The real story, however, was in its operating income, which surged from just $15 million in Q3 2024 to $80 million this quarter—a 433% increase. This dramatic improvement was fueled by better performance on its carrier and submarine programs, which resulted in far fewer negative cumulative catch-up adjustments. These adjustments occur on long-term contracts when a company revises its estimate of total costs. A large negative adjustment, like the $78 million hit Newport News took last year, indicates that costs are running higher than expected. The much smaller $13 million negative adjustment this quarter suggests better cost control and more stable program execution.

• The Ingalls segment, which builds amphibious ships and destroyers, also delivered a strong quarter. Revenue jumped 25% to $828 million, while operating income grew by 33% to $65 million, reflecting higher volumes on key surface combatant programs.

• Mission Technologies, the company's high-tech services arm, reported steady growth. Revenues increased 11% to $787 million, driven by demand for its C5ISR (Command, Control, Computers, Communications, Cyber, Intelligence, Surveillance, and Reconnaissance) and training solutions. Operating income remained stable at $34 million.

A Growing Backlog Signals Smooth Sailing Ahead

For a long-cycle business like shipbuilding, the order backlog is a critical indicator of future health. HII’s total backlog grew substantially to $55.7 billion at the end of the quarter, a significant increase from $48.7 billion at the beginning of the year.

This backlog provides excellent revenue visibility for years to come. It's composed of $33.2 billion in funded backlog—work for which Congress has already appropriated money—and $22.5 billion in unfunded backlog for future work on existing multi-year contracts.

In summary, Huntington Ingalls Industries posted a powerful third quarter, showcasing strong top-line growth and a significant expansion in profitability. The impressive turnaround at the Newport News division was the primary driver of this success, signaling improved execution on its most complex and vital naval programs. With a massive and growing backlog, HII appears well-positioned to navigate the future, though it continues to face industry-wide challenges such as supply chain performance and the need to attract and retain a skilled workforce.