HII, the largest US naval shipbuilder, lifted its order backlog to a record $54.0 billion in the first quarter. The Virginia-based defense company posted stronger revenue but could not prevent a squeeze on operating margins, according to the results for the period ended 31 March 2026. Revenue rose 13.4% year on year to $3.10 billion, supported by higher shipbuilding volumes at Newport News Shipbuilding and Ingalls Shipbuilding.
Net earnings were unchanged at $149 million, or $3.79 per diluted share, while operating income slipped to $155 million from $161 million. Operating margin narrowed to 5.0% from 5.9%. New contract awards totalled $4.0 billion in the quarter. HII reaffirmed its previously issued financial guidance for 2026.
Chief executive Chris Kastner said the company made good progress on its 2026 operational initiatives in the first quarter, noting that shipbuilding throughput continued to improve with meaningful year-over-year growth as the team focused on efficiency and expanding the industrial base network. Newport News Shipbuilding remained the main contributor, with revenue up 19.3% to $1.67 billion on higher volumes in aircraft carriers, submarines and naval nuclear support services. Segment margin narrowed to 5.3% from 6.1%.
Ingalls Shipbuilding revenue increased 13.8% to $725 million, helped by higher volumes in surface combatants. The Pascagoula yard continues to expand its order book following an April contract worth $283 million for the FF(X) frigate program. Mission Technologies revenue rose 1.8% to $748 million, while operating income fell to $35 million from $40 million.
HII operates through Newport News Shipbuilding, Ingalls Shipbuilding and Mission Technologies, serving government customers across naval shipbuilding, mission systems and defense technologies. The record backlog points to a stable revenue runway for years to come, while the margin compression reflects cost pressures, labor and material bottlenecks across the US defense supply chain.
Key Takeaways:
1. HII order backlog hit a record $54.0 billion in Q1; new contract awards reached $4.0 billion in the quarter.
2. Consolidated revenue rose 13.4% to $3.10 billion, while net earnings were unchanged at $149 million.
3. Operating margin narrowed to 5.0% from 5.9% and operating income slipped to $155 million from $161 million.
4. Newport News Shipbuilding revenue grew 19.3% to $1.67 billion; Ingalls Shipbuilding revenue rose 13.8% to $725 million.
5. CEO Chris Kastner reaffirmed 2026 financial guidance and pointed to continued shipbuilding throughput gains.
