Slides
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Q3 2026 Earnings Call Chris Kastner President and CEO Tom Stiehle EVP and CFO Andy Green EVP and President, Mission Technologies October 29, 2026
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Q3 2026 EARNINGS Cautionary Statement Regarding Forward-looking Statements Statements in this presentation, as well as other statements we may make from time to time, other than statements of historical fact, constitute "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," " guidance," "outlook," "predicts," "potential," "continue," and similar words or phrases or the negative of these words or phrases. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by these forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable when made, we cannot guarantee future results, levels of activity, performance, or achievements. There are a number of important factors that could cause our actual results to differ materially from the results anticipated by our forward-looking statements, which include, but are not limited to: our dependence on the U.S. Government for substantially all of our business; significant delays or reductions in appropriations for our programs and/or changes in customer priorities and requirements (including government budgetary constraints, government shutdowns, shifts in defense spe nding, and changes in customer short-range and long-range plans); our ability to estimate our future contract costs, including cost increases due to inflation, labor challenges, changes in trade policy, or other factors and our efforts to recover or offset such costs and/or changes in estimated contract costs, and perform our contracts effectively; changes in business practices, procurement processes and government regulations, including changes thr ough executive orders, contract terms, or other policies or practices applicable to our industry, and our ability to comply with such requirements; adverse economic conditions in the United States and globally; our level of indebtedness and ability to service our indebtedness; our ability to deliver our products and services at an affordable life cycle cost and compete within our markets; our ability to attract, retain, and train a qualified workforce; subcontractor and supplier performance and the availability and pricing of raw materials and components; our ability to execute our strategic plan, including with respect to share repurchases, dividends, capital expenditures, and strategic acquisitions; investigations, claims, disputes, enforcement actions, litigation (including criminal, civil, and administrative), and/or other legal proceedings, and improper conduct of employees, agents, subcontractors, suppliers, business partners, or joint ventures in which we participate, including the impact on our reputation or ability to do business; changes in key estimates and assumptions regarding our pension and retiree health care costs; security threats, including cybersecurity threats, and relat ed disruptions; natural and environmental disasters and political instability; health epidemics, pandemics and similar outbreaks; and other risk factors discussed in our filings with the SEC. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business, and we undertake no obligation to update or revise any forward-looking statements. You should not place undue reliance on any forward-looking statements that we may make. 2
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Q3 2026 EARNINGS 3 Q3 2026 Highlights Q3 2026 RESULTS AWARDS & VISIBILITY ~11% Q3 2026 Revenue Growth YoY Increasing 2026 Revenue Guidance 2.4x Q3 2026 Mission Technologies Book-to-Bill Key Q3 Contract Awards Virginia-class Block VI and Columbia-class Build II Submarines CVN 75, USS Harry S. Truman, Refueling and Complex Overhaul1 CVN 82 Long Lead Time Material Execution Progress CVN 79, John F. Kennedy, Achieved Preliminary Acceptance Hiring and Retention Continue to Improve Distributed Shipbuilding Network Performing Well and Expanding $32.4B Contract Awards In Q3 2026 ROMULUS Medium Unmanned Surface Vessel (MUSV) Lionfish Small Unmanned Undersea Vehicle (SUUV) STINGRAI SOUTHCOM ISR 1 Award and backlog value will be recognized in Q4 2026 results.
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Q3 2026 EARNINGS Three Months Ended September 30 ($M) 2025 2026 % Change Ingalls Shipbuilding 828 876 5.8% Newport News Shipbuilding 1,617 1,910 18.1% Mission Technologies 787 792 0.6% Eliminations (40) (41) - Total 3,192 3,537 10.8% HII Q3 2026 Revenue 4 $3,192 $3,537 Q325 Q326 CONSOLIDATED REVENUE ($M) REVENUE BY SEGMENT +10.8% YoY revenue growth KEY DRIVERS YoY variance driven primarily by higher submarine and aircraft carrier volumes at Newport News Shipbuilding, and higher amphibious assault ship volumes at Ingalls Shipbuilding.
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Q3 2026 EARNINGS $179 $262 Q325 Q326 5.6% 7.4% HII Q3 2026 Segment Operating Income1 6.1% 9.8% 3.7% Three Months Ended September 30 ($M) 2025 2026 % Change Ingalls Shipbuilding 65 59 (9.2%) Newport News Shipbuilding 80 132 65.0% Mission Technologies 34 71 108.8% Total 179 262 46.4% 51 Non-GAAP measure. See appendix for definition and reconciliation. +46.4% YoY segment operating income1 growth KEY DRIVERS Segment Operating Income1 growth driven by contract adjustments and incentives in submarines at Newport News Shipbuilding along with volume growth, as well as a successful milestone achievement in Unmanned Systems and higher equity income from nuclear and environmental joint ventures at Mission Technologies. SEGMENT OPERATING INCOME 1 ($M) & MARGIN 1 % SEGMENT OPERATING INCOME 1 BY SEGMENT
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Q3 2026 EARNINGS HII Q3 2026 Capital Deployment 1 Non-GAAP measure. See appendix for definition and reconciliation. 6 FREE CASH FLOW1 ($M) Q326Q325 Cash Provided By Ops. CAPEX Free Cash Flow1 $118 $520 ($102) ($91) $16 $429 ($200) ($100) $0 $100 $200 $300 $400 $500 $600 $2.1B Liquidity at quarter end; cash balance of $387M $91M Net capital expenditures; 2.6% of Q3 2026 revenues $54M Q3 2026 dividends None No shares repurchased in the quarter
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Q3 2026 EARNINGS HII Outlook1 1 The financial outlook, expectations and other forward-looking statements provided by the company for 2026 and beyond reflect the company's judgment based on the information available at the time of this presentation. Please see the “Cautionary Statement Regarding Forward-looking Statements" section in this presentation and the “Forward-Looking Statements and Projections” section in our Quarterly Report on Form 10-Q for factors that may impact the company's ability to meet expectations. 2 Medium term growth represents our expected compounded annual growth rate over the next three to five years. 3 Non-GAAP measures. See appendix for definitions. In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward–looking GAAP and non–GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to the variability in the occurrence and the amounts of certain components of GAAP and non-GAAP measures. For the same reasons, we are unable to address the significance of the unavailable information, which could be material to future results. 4 Outlook is based on current tax law. Variability exists based on how and when individual states conform to recent federal tax law changes. 7 FY26 Outlook1 Shipbuilding Revenue $10.5B - $10.7B Shipbuilding Operating Margin3 6.0% - 6.5% Mission Technologies Revenue $3.0B - $3.2B Mission Technologies Segment Operating Margin ~6% Mission Technologies EBITDA Margin3 ~9% Operating FAS/CAS Adjustment ($40M) Non-current State Income Tax Expense4 ($27M) Interest Expense ($100M) Non-operating Retirement Benefit $213M Effective Tax Rate ~17% Depreciation & Amortization ~$330M Capital Expenditures ~$500M Free Cash Flow3 $500M - $600M HII Medium Term2 Revenue Growth of ~6% • Shipbuilding medium term2 revenue growth of ~6% • Additional upside from recently announced frigate and battleship • Mission Technologies medium term2 revenue growth of ~5% 2026 Expectations • Shipbuilding revenue of $10.5B to $10.7B • Shipbuilding operating margin3 of 6.0% to 6.5% • Mission Technologies revenue of $3.0B to $3.2B • Mission Technologies operating margin of ~6% • Effective tax rate of ~17% Cumulative FY26 & FY27 Free Cash Flow3 Target of $1.2B to $1.3B FY26 OUTLOOK 1
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Q3 2026 EARNINGS Appendix 8
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Q3 2026 EARNINGS Non-GAAP Information This earnings presentation contains non-GAAP (accounting principles generally accepted in the United States of America) financial measures as defined by SEC Regulation G and indicated by a footnote in the text of this presentation. Definitions for the non-GAAP measures, and related reconciliations, are provided below. Because not all companies use identical definitions or calculations, our presentation of these measures may not be comparable to similarly titled measures of other companies. Segment Operating Income and Segment Operating Margin. We internally manage our operations by reference to segment operating income and segment operating margin and use these measures to evaluate our core operating performance. We believe that segment operating income and segment operating margin reflect additional ways of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These measures should be considered in addition to, and not as alternatives for, operating income and operating margin or any other performance measure presented in accordance with GAAP. Segment operating income is defined as operating income for the relevant segment(s) before the Operating FAS/CAS Adjustment and non-current state income taxes. Segment operating margin is defined as segment operating income as a percentage of sales and service revenues. Shipbuilding operating margin, Mission Technologies EBITDA and Mission Technologies EBITDA margin. We use shipbuilding operating margin, Mission Technologies EBITDA and Mission Technologies EBITDA margin to evaluate our core operating performance. We believe these measures reflect additional ways of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These measures should be considered in addition to, and not as alternatives for, operating income and operating margin or any other performance measure presented in accordance with GAAP. Shipbuilding operating margin is defined as the combined segment operating income of our Newport News Shipbuilding segment and Ingalls Shipbuilding segment as a percentage of shipbuilding revenue. Shipbuilding revenue is the sum of revenues of our Newport News Shipbuilding segment and Ingalls Shipbuilding segment. Mission Technologies EBITDA is defined as Mission Technologies segment operating income before interest expense, income taxes, depreciation, and amortization. Mission Technologies EBITDA margin is defined as Mission Technologies EBITDA as a percentage of Mission Technologies revenues. Free cash flow. We use free cash flow as a key operating metric in assessing the performance of our business and as a key performance measure in evaluating management performance and determining incentive compensation. We believe free cash flow is an important liquidity measure that may be useful to investors and other users of our financial statements because it provides insight into our current and period-to-period performance and our ability to generate cash from continuing operations. Free cash flow has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, net income as a measure of our performance or net cash provided by operating activities as a measure of our liquidity. Free cash flow is defined as net cash provided by (used in) operating activities less capital expenditures net of related grant proceeds. In reliance upon Item 10(e)(1)(i)(B) of Regulation S-K, reconciliations of forward-looking GAAP and non-GAAP measures are not provided because of the unreasonable effort associated with providing such reconciliations due to the variability in the occurrence and the amounts of certain components of GAAP and non-GAAP measures. For the same reasons, we are unable to address the significance of the unavailable information, which could be material to future results. 9
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Q3 2026 EARNINGS Non-GAAP Reconciliations Segment Operating Income & Segment Operating Margin 10 ($ in millions) 2026 2025 2026 2025 Ingalls revenues 876 828 2,446 2,189 Newport News revenues 1,910 1,617 5,424 4,616 Mission Technologies revenues 792 787 2,300 2,313 Intersegment eliminations (41) (40) (116) (110) Sales and Service Revenues 3,537 3,192 10,054 9,008 Operating Income 246 161 611 485 Operating FAS/CAS Adjustment 12 9 29 25 Non-current state income taxes 4 9 18 12 Segment Operating Income 262 179 658 522 As a percentage of sales and service revenues 7.4 % 5.6 % 6.5 % 5.8 % Ingalls segment operating income 59 65 166 165 As a percentage of Ingalls revenues 6.7 % 7.9 % 6.8 % 7.5 % Newport News segment operating income 132 80 331 247 As a percentage of Newport News revenues 6.9 % 4.9 % 6.1 % 5.4 % Mission Technologies segment operating income 71 34 161 110 As a percentage of Mission Technologies revenues 9.0 % 4.3 % 7.0 % 4.8 % Three Months Ended September 30 September 30 Nine Months Ended
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Q3 2026 EARNINGS Non-GAAP Reconciliations Shipbuilding Operating Margin 11 ($ in millions) 2026 2025 2026 2025 Sales and service revenues 3,537 3,192 10,054 9,008 Mission Technologies (792) (787) (2,300) (2,313) Intersegment eliminations 41 40 116 110 Shipbuilding Revenues 2,786 2,445 7,870 6,805 Operating Income 246 161 611 485 Operating FAS/CAS Adjustment 12 9 29 25 Non-current state income taxes 4 9 18 12 Segment Operating Income 262 179 658 522 Mission Technologies (71) (34) (161) (110) Shipbuilding operating income 191 145 497 412 As a percentage of shipbuilding revenues 6.9 % 5.9 % 6.3 % 6.1 % Three Months Ended September 30 September 30 Nine Months Ended
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Q3 2026 EARNINGS Non-GAAP Reconciliations Free Cash Flow 12 ($ in millions) 2026 2025 2026 2025 Net cash provided by operating activities 520 118 99 546 Less capital expenditures: Capital expenditure additions (95) (105) (288) (268) Grant proceeds for capital expenditures 4 3 7 6 Free cash flow 429 16 (182) 284 Three Months Ended September 30 September 30 Nine Months Ended
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Q3 2026 EARNINGS Non-GAAP Reconciliations Mission Technologies EBITDA & EBITDA Margin 13 ($ in millions) 2026 2025 2026 2025 Mission Technologies sales and service revenues 792 787 2,300 2,313 Mission Technologies segment operating income 71 34 161 110 Mission Technologies depreciation expense 3 3 9 9 Mission Technologies amortization expense 18 22 53 67 Mission Technologies state tax expense 2 2 6 6 Mission Technologies EBITDA 94 61 229 192 Mission Technologies EBITDA margin 11.9 % 7.8 % 10.0 % 8.3 % Three Months Ended Nine Months Ended September 30September 30
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Q3 2026 EARNINGS 14 Pension Outlook ($ in millions) 2025 20263 20273 Pension Discount Rate 5.98% 5.72% Change from prior est. N/A 6.90% Change from prior est. 118 Bps Expected Long-Term Return on Assets 7.90% N/A Actual Return on Assets 10.7% 1.7%4 through 9/30/26 CAS Recoveries Over/(Under) Cash Contributions1,2 $1 ($3) $1 ($1) N/A FAS Benefit1 $100 $123 N/A $62 ($65) CAS Expense1 $55 $50 $4 $48 N/A FAS/CAS Adjustment1 $155 $173 $4 $110 ($65) Operating FAS/CAS Adjustment1 ($35) ($40) $4 ($40) ($1) Non-Operating Retirement Benefit1 $190 $213 N/A $150 ($64) Pension and Postretirement Benefits Cash Contributions2 $54 $53 $3 $49 N/A 1 Includes pension & other postretirement benefits. 2 2026 projected cash contributions of $53 million include $15 million of discretionary pension contributions ($2 million quali fied; $13 million non-qualified) and $38 million of post retirement benefits contributions. 2027 projected cash contributions of $4 9 million include $15 million of discretionary pension contributions ($2 million qualified; $13 million non -qualified) and $34 million of post retirement benefits contributions. 3 Projected and subject to change. 4 Asset Returns and Discount Rate based on September 30, 2026 estimates.
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Q3 2026 EARNINGS 15 2027 Net Pension & PRB Income Sensitivities ($M) FAS(3) 0.0% 2.0% 3.8% 5.0% 7.0% -75 bps (19) 7 29 44 67 -25 bps 12 36 57 66 77 0 bps 25 49 60 66 77 +25 bps 37 50 59 66 76 +75 bps 39 49 59 66 80 +118 bps 39 50 62 70 85 +150 bps 42 56 69 78 92 +175 bps 45 60 72 81 95 CAS3 0.0% 2.0% 3.8% 5.0% 7.0% 49 49 48 48 48 2026 Actual Asset Return1 Recent asset experience and a revised pension asset allocation drives lower 2027 FAS income than previously projected while CAS expense remains relatively flat. Discount Rate Movement2 1 Assumed 2026 asset return for qualified pension plans. Year-to-date returns of 1.7% and assumes expected long-term return for the remainder of the year. 2 Increase in discount rate of 118 bps from prior Outlook, dated 2/5/26. As of 9/30/2026, the composite FAS discount rate is 6.90% for pension and 6.65% for other postretirement benefit plans. 3 Due to the adoption of safe harbor under CAS and the current level of funding relief, interest rate movement has little impac t on 2027 CAS expense. CAS expense is primarily attributable to the unfunded other postretirement benefit plans and the non -qualified pension plan. Therefore, changes in the 2026 asset return for qualified pension plans has minimal impact to CAS expense.