HII Raises Shipbuilding Revenue Outlook to $10.5–$10.7 Billion for 2026
Key Facts
HII reported results for the third quarter of its fiscal 2026 on October 29 and raised its full-year shipbuilding revenue outlook to $10.5–$10.7 billion. The company maintained its operating margin outlook for the business at 6.0–6.5%, according to its earnings release. The announcement came as the company posted record quarterly revenue and higher profit than in the same period last year. In premarket trading on the day of the announcement, the stock rose 5.6% to $295, according to an Investing.com report. The move reflects the market's reaction to the results and new guidance and does not indicate the stock's performance during the trading session or at the close.
Third-quarter revenue was $3.537 billion, compared with $3.192 billion in the third quarter of 2025, an annual increase of 10.8%, according to figures published in the company's release via Nasdaq. Operating income rose to $246 million from $161 million in the year-earlier period, while the operating margin climbed to 7.0% from 5.0%. Net earnings also rose to $217 million, compared with $145 million a year earlier. Diluted earnings per share were $5.48, compared with $3.68 in the third quarter of 2025. These comparisons place the higher full-year guidance in the context of a quarter marked by revenue growth and improved operating income and earnings.
Revenue growth was tied to increased activity at the Newport News and Ingalls shipyards, though performance differed between them. Newport News revenue rose 18.1% to $1.9 billion, up $293 million from the same period in 2025. The company release attributed the increase mainly to higher production volumes in submarines and aircraft carriers. Ingalls revenue increased 5.8% to $876 million, but its operating income fell 9.2% to $59 million. The release attributed the decline in Ingalls operating income to weaker performance in surface combatants, highlighting the divergence between the two businesses despite higher revenue at both.
Revenue growth coincided with $32.4 billion in contract awards in the third quarter, bringing year-to-date awards to $43.1 billion through quarter-end. Chief Executive Chris Kastner said the large awards the company received during the quarter covered about 90% of expected shipbuilding revenue through 2030. He added that the company's focus is on executing its shipbuilding work in light of this contract visibility. This coverage provides an indication of the contract-related revenue extending through the end of the decade, while the company still has to execute the work underpinning those projections. According to Investing.com, HII also reaffirmed its free cash flow outlook, alongside raising its full-year shipbuilding revenue range.
The earnings announcement comes as the U.S. naval shipbuilding industry faces challenges related to cost, schedules and production capacity. A presidential memorandum dated August 13, 2026, said the U.S. Navy had experienced shipbuilding setbacks stemming from complex designs and repeated design-change procedures, leading to higher costs, delays and cancellations. The memorandum also linked these problems to a lack of production capacity and competition. In this context, HII's higher outlook applies to the company's shipbuilding revenue for fiscal 2026 and does not represent a sector-wide forecast revision. The company's reference to contract awards and revenue coverage through 2030 remains part of its presentation of results and execution plans, alongside the differing operating performance across its shipyards.