Financial Analysis

COMMITMENTS AND CONTINGENCIES Contract Performance Contingencies - Contract profit margins may include estimates of revenues for matters on which the customer and the Company have not reached agreement, such as settlements in the process of negotiation, contract changes, claims, and requests for equitable adjustment for unanticipated contract costs. These estimates are based upon management's best assessment of the underlying causal events and circumstances and recognized to the extent of expected recovery based upon contractual entitlements and the probability of successful negotiation with the customer. The Company believes its outstanding customer settlements will be resolved without material impact to its financial position, results of operations, or cash flows. Environmental Matters - The estimated costs to complete environmental remediation are accrued when it is probable that the Company will incur such costs in the future to address environmental conditions at currently or formerly owned or leased operating facilities, or at sites where it has been named a Potentially Responsible Party by the Environmental Protection Agency or similarly designated by another environmental agency, and the related costs can be reasonably estimated by management. When only a range of costs is established and no amount within the range is more probable than another, the minimum amount in the range is accrued. Environmental liabilities are recorded on an undiscounted basis and are expensed …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

The following tables present revenues on a disaggregated basis: Three Months Ended June 30, 2026 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Revenue Type Product sales $ 721 $ 1,520 $ 30 $ $ 2,271 Service revenues 122 329 696 1,147 Intersegment 2 34 (36) Sales and service revenues $ 845 $ 1,849 $ 760 $ (36) $ 3,418 Customer Type Federal $ 843 $ 1,849 $ 721 $ $ 3,413 Commercial 5 5 Intersegment 2 34 (36) Sales and service revenues $ 845 $ 1,849 $ 760 $ (36) $ 3,418 Contract Type Firm fixed-price $ 13 $ 2 $ 108 $ $ 123 Fixed-price incentive 709 844 1 1,554 Cost-type 121 1,003 585 1,709 Time and materials 32 32 Intersegment 2 34 (36) Sales and service revenues $ 845 $ 1,849 $ 760 $ (36) $ 3,418 Three Months Ended June 30, 2025 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Revenue Type Product sales $ 610 $ 1,319 $ 28 $ $ 1,957 Service revenues 111 283 731 1,125 Intersegment 3 1 32 (36) Sales and service revenues $ 724 $ 1,603 $ 791 $ (36) $ 3,082 Customer Type Federal $ 721 $ 1,601 $ 756 $ $ 3,078 Commercial 1 2 3 State and local government agencies 1 1 Intersegment 3 1 32 (36) Sales and service revenues $ 724 $ 1,603 $ 791 $ (36) $ 3,082 Contract Type Firm fixed-price $ 5 $ 2 $ 104 $ $ 111 Fixed-price incentive 605 808 1 1,414 Cost-type 111 792 619 1,522 Time and materials 35 35 Intersegment 3 1 32 (36) Sales and service revenues $ 724 $ 1,603 $ 791 $ (36) $ 3,082 Six Months Ended June 30, …

DisaggregationOfRevenueTableTextBlock · excerpt; the full note is in the filing

STOCK COMPENSATION PLANS During the six months ended June 30, 2026 and 2025, the Company issued new stock awards as follows: Restricted Performance Stock Rights - For the six months ended June 30, 2026, the Company granted approximately 0.1 million RPSRs at a weighted average share price of $433.96. These rights are subject to cliff vesting on December 31, 2028. For the six months ended June 30, 2025, the Company granted approximately 0.2 million RPSRs at a weighted average share price of $168.81. These rights are subject to cliff vesting on December 31, 2027. All of the RPSRs are subject to the achievement of performance-based targets at the end of the respective vesting periods and will ultimately vest between 0% and 200% of grant date value. Compensation Restricted Stock Rights - For the six months ended June 30, 2026, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $434.27. For the six months ended June 30, 2025, the Company granted approximately 0.1 million compensation RSRs at a weighted average share price of $168.92. These rights vest 33 1/3% upon each of the first, second, and third anniversaries of the grant date. Retention Restricted Stock Rights - Retention stock awards are granted to key employees primarily to incentivize continued employment with the Company. For the six months ended June 30, 2026, the Company granted approximately 1,900 retention RSRs at a weighted average share price of $363.70, with cliff v …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

"INCOME TAXES The Company's earnings are primarily domestic, and its effective income tax rates on earnings from operations for the three months ended June 30, 2026 and 2025, were 18.1% and 19.1%, respectively. For the six months ended June 30, 2026 and 2025, the Company's effective income tax rates on earnings from operations were 19.2% and 19.7%, respectively. The lower effective tax rates for the three and six months ended June 30, 2026, were primarily attributable to income tax benefits associated with stock award settlement activity. For the three and six months ended June 30, 2026, the Companys effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to income tax benefits associated with stock award settlement activity. The Company's unrecognized tax benefits increased by $1 million and $4 million during the three and six months ended June 30, 2026, respectively. As of June 30, 2026, the estimated amounts of the Company's unrecognized tax benefits, excluding interest and penalties, were liabilities of $109 million. Assuming a sustainment of these tax positions, a reversal of $85 million of the accrued amounts would favorably affect the Company's effective federal income tax rate in future periods. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. For the three and six months ended June 30, 2026, interest and penalties resulting from the unrecognized tax benefits noted a …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

INVESTIGATIONS, CLAIMS, AND LITIGATION The Company is involved in legal proceedings before various courts and administrative agencies, and is periodically subject to government examinations, inquiries and investigations. The Company accrues for losses associated with legal proceedings when, and to the extent that, loss amounts related to the legal proceedings are probable and can be reasonably estimated. The actual losses that might be incurred to resolve such legal proceedings may be higher or lower than the amounts accrued. The Company also provides footnote disclosure for matters for which a material loss is reasonably possible but a reserve has not been accrued because the likelihood of a material loss is not probable. Antitrust Complaint - In October 2023, a class action antitrust lawsuit was filed against the Company and other defendants in the U.S. District Court for the Eastern District of Virginia. The lawsuit names several HII companies, among other companies, as defendants. The named plaintiffs generally allege that the defendant companies have adhered to a gentlemens agreement that prohibits any defendant from actively recruiting naval engineers from other defendants. The complaint seeks class certification, treble damages, and any other relief to which the plaintiffs are entitled. The District Court dismissed the lawsuit against all defendants in April 2024 on statute of limitations grounds without addressing the motions to dismiss filed by the defendants on othe …

LegalMattersAndContingenciesTextBlock · excerpt; the full note is in the filing

EMPLOYEE PENSION AND OTHER POSTRETIREMENT BENEFITS The Company provides eligible employees defined benefit pension plans, defined contribution benefit plans, and other postretirement benefit plans. The costs of the Company's defined benefit pension plans and other postretirement benefit plans for each of the three and six months ended June 30, 2026 and 2025, were as follows: Three Months Ended June 30 Six Months Ended June 30 Pension Benefits Other Benefits Pension Benefits Other Benefits ($ in millions) 2026 2025 2026 2025 2026 2025 2026 2025 Components of net periodic benefit cost Service cost $ 22 $ 21 $ 1 $ 1 $ 43 $ 43 $ 2 $ 2 Interest cost 84 84 4 5 169 168 8 9 Expected return on plan assets (143) (137) (287) (274) Amortization of prior service cost (credit) 4 4 8 8 Amortization of net actuarial loss (gain) 1 (3) (3) 2 (6) (6) Net periodic benefit (income) cost $ (32) $ (28) $ 2 $ 3 $ (65) $ (55) $ 4 $ 5 The Company made the following contributions to its defined benefit pension plans and other postretirement benefit plans for the six months ended June 30, 2026 and 2025: Six Months Ended June 30 ($ in millions) 2026 2025 Pension plans Discretionary Qualified $ 2 $ Non-qualified 6 7 Other benefit plans 21 21 Total contributions $ 29 $ 28 As of June 30, 2026, the Company anticipates no further significant cash contributions to its qualified defined benefit pension plans in 2026. …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

"REVENUE Disaggregation of Revenue The following tables present revenues on a disaggregated basis: Three Months Ended June 30, 2026 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Revenue Type Product sales $ 721 $ 1,520 $ 30 $ $ 2,271 Service revenues 122 329 696 1,147 Intersegment 2 34 (36) Sales and service revenues $ 845 $ 1,849 $ 760 $ (36) $ 3,418 Customer Type Federal $ 843 $ 1,849 $ 721 $ $ 3,413 Commercial 5 5 Intersegment 2 34 (36) Sales and service revenues $ 845 $ 1,849 $ 760 $ (36) $ 3,418 Contract Type Firm fixed-price $ 13 $ 2 $ 108 $ $ 123 Fixed-price incentive 709 844 1 1,554 Cost-type 121 1,003 585 1,709 Time and materials 32 32 Intersegment 2 34 (36) Sales and service revenues $ 845 $ 1,849 $ 760 $ (36) $ 3,418 Three Months Ended June 30, 2025 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Revenue Type Product sales $ 610 $ 1,319 $ 28 $ $ 1,957 Service revenues 111 283 731 1,125 Intersegment 3 1 32 (36) Sales and service revenues $ 724 $ 1,603 $ 791 $ (36) $ 3,082 Customer Type Federal $ 721 $ 1,601 $ 756 $ $ 3,078 Commercial 1 2 3 State and local government agencies 1 1 Intersegment 3 1 32 (36) Sales and service revenues $ 724 $ 1,603 $ 791 $ (36) $ 3,082 Contract Type Firm fixed-price $ 5 $ 2 $ 104 $ $ 111 Fixed-price incentive 605 808 1 1,414 Cost-type 111 792 619 1,522 Time and materials 35 35 Intersegment 3 1 32 (36) Sales and service revenues $ 724 $ 1,603 $ 791 $ (36 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

SEGMENT INFORMATION The following tables present the Company's operating results by segment: Three Months Ended June 30, 2026 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Sales and Service Revenues Product sales $ 721 $ 1,520 $ 30 $ $ 2,271 Service revenues 122 329 696 1,147 Intersegment 2 34 (36) Total sales and service revenues 845 1,849 760 (36) 3,418 Segment Operating Income Income from operating investments, net 21 21 Less: Cost of sales and service revenues Product 631 1,327 20 1,978 Service 111 275 615 1,001 Intersegment 2 34 (36) Other segment items 43 136 57 236 Total segment operating income $ 58 $ 111 $ 55 $ 224 Non-segment factors affecting operating income Operating FAS/CAS Adjustment (8) Non-current state income taxes (6) Total operating income $ 210 Three Months Ended June 30, 2025 ($ in millions) Ingalls Newport News Mission Technologies Intersegment Eliminations Total Sales and Service Revenues Product sales $ 610 $ 1,319 $ 28 $ $ 1,957 Service revenues 111 283 731 1,125 Intersegment 3 1 32 (36) Total sales and service revenues 724 1,603 791 (36) 3,082 Segment Operating Income Income from operating investments, net 8 8 Less: Cost of sales and service revenues Product 526 1,145 20 1,691 Service 100 234 656 990 Intersegment 3 1 32 (36) Other segment items 41 141 55 237 Total segment operating income $ 54 $ 82 $ 36 $ 172 Non-segment factors affecting operating income Operating FAS/CAS Adjustment (6) Non-current state …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

STOCKHOLDERS' EQUITY Treasury Stock - In January 2024 , the Company's board of directors authorized an increase in the Company's stock repurchase program from $3.2 billion to $3.8 billion and an extension of the term of the program to December 31, 2028. Repurchases are made from time to time at management's discretion in accordance with applicable federal securities laws. For each of the six months ended June 30, 2026 and 2025, the Company did not repurchase any shares. The cost of purchased shares is recorded as treasury stock in the unaudited condensed consolidated statements of financial position. Dividends - The Company paid cash dividends totaling $109 million and $106 million for the six months ended June 30, 2026 and 2025, respectively. Accumulated Other Comprehensive Loss - Other comprehensive income (loss) refers to gains and losses recorded as an element of stockholders' equity but excluded from net earnings. The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $50 million and $53 million as of June 30, 2026, and December 31, 2025, respectively. The changes in accumulated other comprehensive loss by component for the three and six months ended June 30, 2026 and 2025, were as follows: ($ in millions) Benefit Plans Total Balance as of March 31, 2025 $ (27) $ (27) Amounts reclassified from accumulated other comprehensive loss Amortization of prior service cost 4 4 Amortization of net actuarial gain (3) (3) Net current period other …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing