Analogy 1: Boeing for military ships

Analogy 2: Lockheed Martin for naval defense platforms

• Naval Warships: Designs, constructs, and maintains a diverse range of naval vessels, including aircraft carriers, submarines, and surface combatants for the U.S. Navy and Coast Guard.
• Fleet Sustainment and Modernization: Provides comprehensive maintenance, repair, and upgrade services for naval ships throughout their operational lifecycle.
• Autonomous Systems: Develops and manufactures unmanned underwater and surface vehicles for defense, marine research, and commercial applications.
• C5ISR and Digital Solutions: Offers advanced command, control, communications, computers, cyber, intelligence, surveillance, and reconnaissance (C5ISR) systems, alongside cybersecurity and digital engineering services.
• Nuclear and Environmental Services: Provides complex nuclear and environmental management solutions, predominantly for government clients.

Huntington Ingalls Industries (HII) primarily sells to government entities rather than private companies or individuals. Its major customers are branches and agencies of the U.S. government, which act as large institutional buyers for its defense and national security products and services.

HII's major customers include:

• U.S. Navy: This is HII's principal customer, particularly for its shipbuilding division, which constructs aircraft carriers, amphibious assault ships, and destroyers.
• U.S. Coast Guard: A significant customer for certain cutter programs and other maritime support services.
• Other U.S. Department of Defense (DoD) Agencies: Various other branches and components of the DoD procure HII's mission technologies and services.
• U.S. Department of Energy (DoE): HII provides nuclear services and support to the DoE.
• International Governments: Allied nations also purchase U.S.-made defense articles or services from HII, often through foreign military sales programs, though this segment represents a smaller portion of HII's total revenue compared to the U.S. government.

As these are government entities and not public companies, they do not have stock symbols.

• Lockheed Martin Corporation (LMT)
• RTX Corporation (RTX)
• General Electric Company (GE)
• BAE Systems plc (BAESY)
• Northrop Grumman Corporation (NOC)

Christopher D. Kastner, President and Chief Executive Officer

Christopher D. Kastner became President and CEO of Huntington Ingalls Industries in March 2022, having previously served as Chief Operating Officer and Executive Vice President and Chief Financial Officer at HII. Before joining HII in 2011, Kastner held various leadership roles at Northrop Grumman, including Vice President, Business Management, and CFO for Northrop Grumman Shipbuilding-Gulf Coast, and Director of Strategic Transactions at Northrop Grumman's corporate office, where he was responsible for mergers, acquisitions, and divestitures.

Thomas E. Stiehle, Executive Vice President and Chief Financial Officer

Thomas E. Stiehle was appointed Executive Vice President and Chief Financial Officer of HII in February 2021. Prior to this role, he served as Vice President and CFO at HII's Ingalls Shipbuilding division and as Vice President, Contracts and Pricing for Ingalls. Before joining HII in 2011, Stiehle spent 24 years at Northrop Grumman Corporation, starting his career as a design engineer at Grumman Aircraft Corp. and advancing through various business management positions.

Kari Wilkinson, Executive Vice President and President, Newport News Shipbuilding

Kari Wilkinson was named Executive Vice President of HII and President of the Newport News Shipbuilding division in 2025. She previously led the Ingalls Shipbuilding division as President, a position she assumed in 2021. Wilkinson began her career with Ingalls in 1996 as an associate naval architect and progressed through various roles in engineering, program management, and operations, including Vice President of Program Management.

Andy Green, Executive Vice President and President, Mission Technologies

Andy Green serves as Executive Vice President of HII and President of HII's Mission Technologies division, a role he has held since 2016. In this position, he oversees national security solutions in areas such as C5ISR, big data, uncrewed systems, and electronic warfare. Before this, Green was corporate vice president of corporate development and vice president, component manufacturing at HII. He joined HII in 2011 as corporate vice president of investor relations, following prior experience as vice president of investor relations at Celanese Corp. and as an investment banker and research analyst at Wells Fargo. Green is a former U.S. Navy nuclear submarine officer.

The key risks to Huntington Ingalls Industries (HII) primarily stem from its deep integration with U.S. government defense spending and the complexities of large-scale shipbuilding operations.

1. Reliance on U.S. Government Contracts and Budgetary Uncertainty: Huntington Ingalls Industries is heavily dependent on contracts with the U.S. government, particularly the Department of Defense and the U.S. Navy. This reliance exposes the company to significant risks related to government budgetary constraints, shifts in defense spending priorities, and the timing of appropriations or major contract awards. Any delays or reductions in funding for naval projects could directly impact HII's core business and financial performance.

2. Operational Execution, Supply Chain Disruptions, and Labor Shortages: HII faces ongoing challenges related to operational execution at its shipyards, supply chain fragility, and labor availability. The defense industrial base, upon which HII relies for components, is sensitive, with a significant portion of purchase orders for its Newport News segment going to single or sole-source suppliers. These operational hiccups, coupled with persistent labor shortages and inflation, can lead to increased production costs, project delays, and negatively impact the company's profitability and cash flow.

3. Fixed-Price Contracts and Risk of Cost Overruns: A substantial portion of HII's revenue is generated under fixed-price incentive contracts, which inherently carry a higher financial risk than cost-type contracts. In an environment marked by inflationary pressures, wage increases, and supplier challenges, these fixed-price agreements make HII vulnerable to cost overruns, which can directly erode profit margins.

• A shift in U.S. Navy procurement strategy towards a "distributed maritime operations" concept, emphasizing a greater proportion of smaller, less expensive, unmanned, and optionally manned surface and undersea vessels. This evolving strategy could reduce future demand for Huntington Ingalls Industries' traditional core business of building large, complex, and high-value manned warships (e.g., nuclear-powered aircraft carriers and submarines), which constitute the vast majority of its shipbuilding revenue and specialized expertise. While HII is developing capabilities in autonomous systems, a significant strategic pivot by the Navy away from its traditional focus could disproportionately impact HII's current business model.
• Increased competition from hyperscale commercial technology companies and specialized firms in the defense IT, cloud computing, artificial intelligence (AI), and cybersecurity sectors. While HII's Mission Technologies division offers services in these areas, companies such as Amazon (AWS), Microsoft (Azure), Google, and AI/data analytics firms like Palantir are aggressively expanding their presence in defense contracts. These commercial entities often possess faster innovation cycles, massive R&D budgets, and established platforms, potentially making them preferred partners for the DoD in rapidly evolving technology fields and thus eroding HII's market share or competitive differentiation in its Mission Technologies segment.

Huntington Ingalls Industries (HII) primarily operates in two main markets: military shipbuilding and defense technologies (Mission Technologies).

Military Shipbuilding

HII is the largest military shipbuilding company in the United States and is the sole designer, builder, and refueler of nuclear-powered aircraft carriers for the U.S. Navy. The company is also one of only two shipyards capable of designing and building nuclear-powered submarines for the U.S. Navy. Additionally, its Ingalls Shipbuilding division is the largest builder of surface combatants for the U.S. Navy, including destroyers and amphibious assault ships, as well as the sole producer of National Security Cutters for the U.S. Coast Guard.

• U.S. Military Shipbuilding Market: The U.S. shipbuilding industry's revenue is estimated to be approximately $40.9 billion in 2025. The U.S. Navy's fiscal year 2025 budget requested an increase in shipbuilding to $32.4 billion. The Navy's long-term goal of a 381-ship fleet would require an estimated $34 billion to $36 billion annually over the next 30 years for shipbuilding. HII has a significant backlog of around $48 billion entering 2024, with projected contracts potentially worth an additional $50 billion or more in U.S. military shipbuilding demand.
• Global Shipbuilding Market: The global shipbuilding market size is estimated at approximately $157.21 billion in 2025 and is projected to reach $199.37 billion by 2030, growing at a Compound Annual Growth Rate (CAGR) of 4.85% during the forecast period. Other estimates place the global shipbuilding market at around $162.14 billion in 2024, expected to reach $228.82 billion by 2032 with a CAGR of 4.4%. However, HII's primary focus is on the U.S. military sector, and the U.S. commercial shipbuilding market share is minuscule globally (approximately 0.2% of world tonnage in 2023).

Defense Technologies (Mission Technologies)

HII's Mission Technologies segment provides a wide range of professional services and solutions, including C5ISR (Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance) systems, unmanned systems, cybersecurity, IT solutions, training and simulation, and nuclear & environmental services.

• U.S. Defense Market (encompassing many Mission Technologies offerings): The U.S. defense market size is estimated at $320.86 billion in 2025 and is expected to reach $382.56 billion by 2030, with a CAGR of 3.58%. Another projection indicates the U.S. defense market size is forecast to increase by $188 billion at a CAGR of 4.6% between 2024 and 2029.
• Global Defense Market: The global defense market was valued at approximately $473.47 billion in 2024 and is expected to grow to $682.10 billion in 2029, at a CAGR of 7.57%.
• Unmanned Systems Market: Within the defense technologies sector, the unmanned systems market, which HII is active in, is projected to grow at a 9% CAGR through 2030.

Huntington Ingalls Industries (HII): Key Revenue Growth Drivers for the Next 2-3 Years

<h2>Capital Allocation Decisions for Huntington Ingalls Industries (HII) (2020-2025)</h2>

<h3>Share Repurchases</h3>
<ul>
  <li>In January 2024, HII's Board of Directors authorized a $600 million increase in its share repurchase program, raising the total authorization from $3.2 billion to $3.8 billion. The term of the program was also extended to December 31, 2028.</li>
  <li>The company's share repurchase program reflects management's confidence in HII's free cash flow generation and commitment to returning free cash flow to shareholders.</li>
  <li>As of June 30, 2025, $150.0 million of authorized share repurchases remained under the fifteenth share repurchase program.</li>
</ul>

<h3>Share Issuance</h3>
<ul>
  <li>As of September 30, 2025, HII had 53,825,817 shares issued, compared to 53,714,128 shares issued as of September 30, 2024.</li>
  <li>Huntington Ingalls Industries' shares outstanding for the quarter ending September 30, 2025, were 0.039 billion, a 0.25% decline year-over-year.</li>
  <li>The number of shares outstanding has seen a slight decline from 0.04 billion in 2023 to 0.039 billion in 2024.</li>
</ul>

<h3>Outbound Investments</h3>
<ul>
  <li>In 2021, Huntington Ingalls Industries acquired Alion Science and Technology for $1.7 billion, making it HII's largest acquisition to date.</li>
  <li>HII acquired Hydroid, a provider of advanced marine robotics, in 2020.</li>
  <li>In early 2021, HII acquired the autonomy business of Spatial Integrated Systems Inc., further expanding its unmanned systems capabilities.</li>
</ul>

<h3>Capital Expenditures</h3>
<ul>
  <li>Net capital expenditures for the second quarter of 2025 were $93 million, representing 3% of revenues.</li>
  <li>HII anticipates capital expenditures to increase due to investments aimed at expanding its shipbuilding capacity.</li>
  <li>The company is making targeted investments to strengthen its workforce and build a more robust maritime supply chain in support of higher shipbuilding throughput.</li>
</ul>