HII · Q2 2026 Earnings

Bullish

Huntington Ingalls Industries

Reported July 30, 2026

30-second summary

HII delivered Q2 revenue of $3.42B (+10.9% YoY, 8.5% above consensus) and GAAP EPS of $5.27 (37.9% above consensus), with both shipbuilding yards accelerating and Mission Technologies operating margin printing 7.2% vs. the ~4% prior guide. Management raised FY26 shipbuilding revenue guidance to $10.2–$10.4B (from $9.7–$9.9B) and lifted the shipbuilding operating margin floor from 5.5% to 6.0%, while reaffirming the $500–600M FY26 FCF guide despite Q2 FCF of -$150M — $50M below the low end of the -$100M to +$100M Q2 range. The Q4 confidence that was replaced with contingencies in Q1 has now been ratified by execution: the reaffirmation-with-preconditions has become a raise.

Headline numbers

EPS

Q2 FY2026

$5.27

Revenue

Q2 FY2026

$3.42B

+10.9% YoY

+8.5% vs est.

Free cash flow

Q2 FY2026

$-0.15B

Operating margin

Q2 FY2026

6.1%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$3.42B	$3.08B	+10.9%	$3.10B	+10.3%
EPS	$5.27	$3.86	+36.5%	$3.79	+39.1%
Operating margin	6.1%	5.3%	+80bps	5.0%	+110bps
Free cash flow	$-0.15B	$0.73B	-120.5%	$-0.46B	+67.5%

Guidance

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Shipbuilding Revenue	Q2 FY2026	approximately $2.4 billion	$2.694 billion	+$0.294B above guide	Beat
Mission Technologies Revenue	Q2 FY2026	approximately $750 million	$760 million	in-line	Met
Shipbuilding Operating Margin	Q2 FY2026	5.7% to 6.0%	6.0%	+0.0pts at high end of guide	Beat
Mission Technologies Operating Margin	Q2 FY2026	approximately 4%	7.2%	+3.2pts above guide	Beat
Mission Technologies EBITDA Margin	Q2 FY2026	8.4% to 8.6%	10.1%	+1.5pts above high end of guide	Beat
Free Cash Flow	Q2 FY2026	between negative $100 million and positive $100 million	-$150 million	-$50M below guide range	Met

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Shipbuilding Revenue	FY2026	$9.7B to $9.9B	$10.2B to $10.4B	+$0.3B–$0.5B at low-to-high end	Raised
Shipbuilding Operating Margin	FY2026	5.5% to 6.5%	6.0% to 6.5%	+0.5pts at low end	Raised

Reaffirmed unchanged this quarter: Mission Technologies Revenue ($3.0B to $3.2B), Mission Technologies Segment Operating Margin (approximately 5%), Mission Technologies EBITDA Margin (8.4% to 8.6%), Free Cash Flow ($500M to $600M)

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Newport News Shipbuilding	$1.849B	$1.603B	+15.3%
Ingalls Shipbuilding	$0.845B	$0.724B	+16.7%
Mission Technologies	$0.76B	$0.791B	-3.9%

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Segment Operating Margin	6.6%	—	—
Newport News Segment Operating Margin	6.0%	—	—
Ingalls Segment Operating Margin	6.9%	—	—
Mission Technologies Segment Operating Margin	7.2%	4.6%	—
Mission Technologies EBITDA Margin	10.1%	8.1%	—
Total Backlog	$57.3B	$56.9 billion	—
New Contract Awards	$6.7B	—	—
Free Cash Flow	-$150M	—	—

Management tone

Q2 FY25 "next 18 months will be challenging" → Q3 FY25 quiet execution beat → Q4 FY25 medium-term targets raised → Q1 FY26 contingency-laden reaffirmation → Q2 FY26 guidance raise.

No earnings call transcript was available for this quarter; tone commentary below draws on press-release language only.

The Q1 contingencies have been ratified by execution. One quarter ago management framed the FY26 reaffirmation as "predicated on achieving shipbuilding throughput improvements" and "reaching agreement on the next Virginia and Columbia class submarine contracts in the near term" — language that pushed the risk of a guidance reset squarely into Q2. This quarter's press release includes the affirmative statement that HII has "plans in place to achieve our shipbuilding throughput improvement goal of 15%," and backlog stepped up $3.3B QoQ with $6.7B of Q2 awards. The precondition-heavy Q1 reaffirmation has become an unconditional raise: shipbuilding revenue guidance moved up $0.3–$0.5B and the operating margin floor lifted 50bps.

The FY26 shipbuilding margin raise is asymmetric — floor up, ceiling held. Management narrowed the shipbuilding margin band from 100bps wide (5.5–6.5%) to 50bps wide (6.0–6.5%) by raising the floor, describing it as "lifting the lower end of our margin expectations." Holding the ceiling at 6.5% signals management is not yet ready to underwrite the 2027 portfolio-rotation upside case that Q4 framed as the destination — but is willing to remove downside risk from the current portfolio mix.

The Q2 FCF miss is being underplayed. Q2 FCF of -$150M came in $50M below the low end of the -$100M to +$100M range that management set last quarter, and yet the FY26 $500–600M FCF guide was reaffirmed unchanged. Without transcript commentary the bridge is inferential: either H2 collections are expected to more than compensate, or the submarine contract award timing that management flagged as the primary source of Q2 variability slipped further than planned. The Q1 warning that "genuine uncertainty about the submarine contract close" drove the $200M band width is worth remembering — an FCF miss at the low end without a same-quarter guidance revision suggests management has visibility into a specific H2 catalyst not yet disclosed.

Answers to last quarter's watch list

Virginia Block 6 and Columbia Block 2 close in Q2. The press release does not itemize which specific submarine awards closed, but $6.7B of Q2 awards (vs. $4.0B in Q1) and a $3.3B QoQ backlog step-up to $57.3B are consistent with meaningful submarine contract progression. Q2 FCF of -$150M — $50M below the low-end guide — suggests the contract modification cash benefit that management built into the FCF guide at a weighted probability did not fully land in Q2.

Not resolved

Mission Technologies H2 margin step-up. Q2 op margin printed 7.2% vs. Q1's 4.7% and the ~4% Q2 guide, and EBITDA margin printed 10.1% vs. Q1's 7.8% and the 8.4–8.6% band. First-half average op margin is ~5.9%, already above the FY26 ~5% guide. But management reaffirmed FY26 MT margins unchanged, implying H2 compression back toward the guide range — meaning Q2 outperformance is either quarterly noise or the guide is being held conservative pending H2 visibility. Status: Resolved positively for H1

Newport News margin stabilization above 5.3%. Margin printed 6.0% — a 70bps sequential improvement from 5.3% in Q1, with revenue still growing +15.3% YoY. This is the first quarter in the coverage window where Newport News operated above the 5.5% prior-band floor, and materially undercuts the "throughput without margin is structural through 2026" concern from Q1.

Resolved positively

Autonomous portfolio investment quantification. The press release does not size the increased autonomous R&D investment that management flagged in Q1. Without a transcript this quarter, the pre-award R&D spend remains opaque as a Mission Technologies margin variable.

Continue monitoring

Ingalls margin recovery from 6.8%. Ingalls margin printed 6.9% — essentially flat sequentially, not the recovery toward the FY25 7.6% run rate the "one-quarter pacing" framing implied. Not a deterioration below 7.0%, but not a rebound either.

Continue monitoring

What to watch into next quarter

Whether FY26 Mission Technologies margin guidance is finally raised. H1 op margin averaged ~5.9% (Q1 4.7% + Q2 7.2%) vs. the reaffirmed ~5% FY guide, and H1 EBITDA margin averaged ~9.0% vs. the 8.4–8.6% band. If Q3 op margin holds above 5% and management still refuses to raise MT margin guidance, the conservative framing becomes suspect — a Q3 raise would confirm Q2 was not one-time.

FCF trajectory vs. the reaffirmed $500–600M FY26 guide. H1 FCF is -$611M (Q1 -$461M + Q2 -$150M). To hit the $550M midpoint, H2 must generate roughly $1.16B — a materially bigger H2 build than FY25's H2 delivered. Watch Q3 FCF and any explicit disclosure of the H2 submarine contract cash catalyst that must be assumed to make the reaffirmation math work.

Newport News margin above 6.0%. Q2's 6.0% print cleared the prior band floor for the first time. A Q3 print holding at 6.0%+ with revenue still growing double-digits establishes the improvement as structural, not a mix-driven single quarter — the read-through is that the 2027 recovery arc is running ahead of schedule.

Whether HII raises the FY26 shipbuilding margin ceiling. Management raised the floor to 6.0% but held the 6.5% ceiling. A Q3 shipbuilding op margin print above 6.5% would force the ceiling up and validate the medium-term 9–10% shipbuilding margin destination management flagged at the Q4 FY25 call.

Submarine contract disclosure specificity. The Q2 press release does not itemize which specific Virginia Block 6 or Columbia Build 2 milestones drove the $6.7B award total. Q3 disclosure or a definitive award announcement resolves the Q1 watch item that this print left open.

Sources

HII Q2 2026 Earnings Release, filed via SEC: https://www.sec.gov/Archives/edgar/data/1501585/000150158526000045/hii2026q2earningsrelease.htm
HII Q1 2026, Q4 2025, Q3 2025, and Q2 2025 Earnings Releases (prior-quarter baselines)

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