10q10k10q10k.net

What changed in Huntington Ingalls Industries's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Huntington Ingalls Industries's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+434 added−380 removedSource: 10-K (2025-02-06) vs 10-K (2024-02-01)

Top changes in Huntington Ingalls Industries's 2024 10-K

434 paragraphs added · 380 removed · 310 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

68 edited+9 added−16 removed54 unchanged
Biggest changeThere 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: • changes in government and customer priorities and requirements (including government budgetary constraints, shifts in defense spending, and changes in customer short-range and long-range plans); • our ability to estimate our future contract costs, including cost increases due to inflation, and perform our contracts effectively; • changes in procurement processes and government regulations and our ability to comply with such requirements; • our ability to deliver our products and services at an affordable life cycle cost and compete within our markets; • natural and environmental disasters and political instability; 10 • our ability to execute our strategic plan, including with respect to share repurchases, dividends, capital expenditures, and strategic acquisitions; • adverse economic conditions in the United States and globally; • health epidemics, pandemics and similar outbreaks; • our ability to attract, retain, and train a qualified workforce; • disruptions impacting global supply, including those resulting from the ongoing conflict between Russia and Ukraine and in the Middle East; • changes in key estimates and assumptions regarding our pension and retiree health care costs; • security threats, including cyber security threats, and related disruptions; and • other risk factors discussed herein and in our other filings with the SEC.
Biggest changeGovernment 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, shifts in defense spending, 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 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 cyber security threats, and related disruptions; • natural and environmental disasters and political instability; • health epidemics, pandemics and similar outbreaks; and • other risk factors discussed herein and in our other filings with the SEC.
Columbia Class (SSBN 826) Submarines Newport News is participating in the design and construction of the Columbia class (SSBN 826) submarines as a replacement for the current aging Ohio class nuclear ballistic missile submarines ("SSBN"), which were first introduced into service in 1981. The Columbia class (SSBN 826) program currently anticipates 12 new ballistic missile submarines.
Columbia Class (SSBN 826) Submarines Newport News is participating in the design and construction of the Columbia class (SSBN 826) nuclear ballistic missile submarines ("SSBN") as a replacement for the current aging Ohio class submarines, which were first introduced into service in 1981. The Columbia class (SSBN 826) program currently anticipates 12 new ballistic missile submarines.
We are committed to working effectively with our existing unions and believe our relationship with our represented employees is satisfactory. The success and growth of our business depends in large part on our ability to attract, retain, and develop a skilled and diverse workforce of talented and high-performing employees at all levels of our organization.
We are committed to working effectively with our existing unions and believe our relationship with our represented employees is satisfactory. The success and growth of our business depends in large part on our ability to attract, retain, and develop a skilled workforce of talented and high-performing employees at all levels of our organization.
In the event of termination of a contract for convenience, a 5 contractor is normally able to recover costs already incurred on the contract and profit on incurred costs up to the amount authorized under the contract, but not the profit that would have been earned had the contract been completed.
In the event of termination of a contract for convenience, a contractor is normally able to recover costs already incurred on the contract and profit on incurred costs up to the amount authorized under the contract, but not the profit that would have been earned had the contract been completed.
In addition to operating our own apprentice schools, we maintain effective partnerships with colleges and universities, military bases for transitioning veterans, and regional community colleges to enable us to recruit and hire engineering, IT, and other technical talent.
In addition to operating our own apprentice schools, we maintain partnerships with colleges and universities, military bases for transitioning veterans, and regional community colleges to enable us to recruit and hire engineering, IT, and other technical talent.
See "Risk Factors" in Item 1A and Note 16: Commitments and Contingencies under Item 8 for further information regarding environmental matters. Competitive Environment In our business of designing, building, overhauling, and repairing military ships, we primarily compete with General Dynamics and, in the case of certain non-nuclear shipbuilding programs, smaller shipyards. The smaller shipyards sometimes team with large defense contractors.
See "Risk Factors" in Item 1A and Note 15: Commitments and Contingencies under Item 8 for further information regarding environmental matters. Competitive Environment In our business of designing, building, overhauling, and repairing military ships, we primarily compete with General Dynamics and, in the case of certain non-nuclear shipbuilding programs, smaller shipyards. The smaller shipyards sometimes team with large defense contractors.
The nature of major defense programs, conducted under binding long-term contracts, enable companies that perform well to benefit from a level of program continuity not common in many industries. We believe we are well-positioned in our shipbuilding markets. Because we are the only company currently capable of building, refueling, and inactivating the U.S.
The nature of major defense programs, conducted under binding long-term contracts, enables companies that perform well to benefit from a level of program continuity not common in many industries. We believe we are well-positioned in our shipbuilding markets. Because we are the only company currently capable of building, refueling, and inactivating the U.S.
We view our workforce development process critical to our success and have developed a robust and effective succession planning process that ensures continuity in our leadership ranks.
We view our workforce development process as critical to our success and have developed a robust and effective succession planning process that ensures continuity in our leadership ranks.
Working closely with state and local government leaders, we have successfully facilitated local, regional, and state-wide workforce development and education initiatives that include pre-K programs, high school trades programs/talent development labs, pre-hire trades/technical community college programs, interns/co-ops with colleges and universities, adult trades programs, veterans and military spouses training programs, and unemployed/underemployed training programs.
Working closely with state and local government leaders, we also have facilitated local, regional, and state-wide workforce development and education initiatives that include pre-K programs, high school trades programs/talent development labs, pre-hire trades/technical community college programs, interns/co-ops with colleges and universities, adult trades programs, veterans and military spouses training programs, and unemployed/underemployed training programs.
We believe we are well positioned to be the U.S. Navy's shipyard of choice for these contract awards. Design and Construction of Nuclear-Powered Submarines We are one of only two companies in the United States currently capable of designing and building nuclear-powered submarines for the U.S. Navy. Newport News has delivered 63 submarines to the U.S.
We believe we are well positioned to be the U.S. Navy's shipyard of choice for these contract awards. Design and Construction of Nuclear-Powered Submarines We are one of only two companies in the United States currently capable of designing and building nuclear-powered submarines for the U.S. Navy. Newport News has delivered 64 submarines to the U.S.
We also provide undersea vehicle and specialized craft development and prototyping services. Unmanned Systems Unmanned Systems develops advanced unmanned systems for defense, marine research, and commercial applications. Serving customers in more than 30 countries, we provide design, autonomy, manufacturing, testing, operations, and sustainment of unmanned systems, including unmanned underwater vehicles and unmanned surface vessels.
We also provide undersea vehicle and specialized craft development and prototyping services. Uncrewed systems Develops advanced uncrewed systems for defense, marine research, and commercial applications. Serving customers in more than 30 countries, we provide design, autonomy, manufacturing, testing, operations, and sustainment of uncrewed systems, including uncrewed underwater vehicles and uncrewed surface vessels .
See Note 7: Revenue under Item 8 and "Risk Factors" in Item 1A for further information regarding our contracts. Nuclear Our nuclear operations are subject to various safety related requirements imposed by the U.S. Navy, the DoE, and the U.S. Nuclear Regulatory Commission.
See Note 6: Revenue under Item 8 and "Risk Factors" in Item 1A for further information regarding our contracts. Nuclear Our nuclear operations are subject to various safety related requirements imposed by the U.S. Navy, the DoE, and the U.S. Nuclear Regulatory Commission.
In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," and similar words or phrases or the negative of these words or phrases.
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.
In 2023, we were awarded a multi-year contract for construction of six more Arleigh Burke class (DDG 51) destroyers, as well as the first option ship, for a total of seven ships. We are currently 1 constructing Ted Stevens (DDG128), Jeremiah Denton (DDG 129), George M. Neal (DDG 131), Sam Nunn (DDG 133), and Thad Cochran (DDG 135).
In 2023, we were awarded a multi-year contract for construction of six more Arleigh Burke class (DDG 51) destroyers, as well as the first option ship, for a total of seven ships. We are currently constructing Ted Stevens (DDG 128), Jeremiah Denton (DDG 129), George M. Neal (DDG 131), Sam Nunn (DDG 133), and Thad Cochran (DDG 135).
Our Mission Technologies segment provides a wide range of services and products, including command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance ("C5ISR") systems and operations; the application of Artificial Intelligence and machine learning to battlefield decisions; defense and offensive cyberspace strategies and electronic warfare; unmanned autonomous systems; live, virtual, and constructive training solutions; fleet sustainment; and critical nuclear operations.
Our Mission Technologies segment provides a wide range of services and products, including command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance systems and operations; the application of artificial intelligence and machine learning to battlefield decisions; defense and offensive cyberspace strategies and electronic warfare; uncrewed autonomous systems; live, virtual, and constructive training solutions; fleet sustainment; and critical nuclear operations.
We also offer a variety of benefits that allow employees to select the options that meet their needs, including: annual leave/paid time off; paid holidays, flexible work arrangements/schedules; telemedicine; parental leave; transgender medical coverage; and a wellness program that includes physical, mental, and financial wellness components.
We also offer a variety of benefits that allow employees to select the options that meet their needs, including: annual leave/paid time off; paid holidays, flexible work arrangements/schedules; telemedicine; parental leave; and a wellness program that includes physical, mental, and financial wellness components.
Since our founding in 2011, we have followed our succession plans 82% of the time when replacing a vacancy in an existing vice president position, and we have filled 82% of newly created vice president positions with internal hires. See "Risk Factors" in Item 1A for further information regarding our human capital resources.
Since our founding in 2011, we have followed our succession plans over 80% of the time when replacing a vacancy in an existing vice president position, and we have filled approximately 80% of newly created vice president positions with internal hires. See "Risk Factors" in Item 1A for further information regarding our human capital resources.
The Newport News Apprentice School was founded in 1919, and the Ingalls Apprentice School was founded in 1952. The two apprentice schools combined have graduated over 14,400 graduates since their inceptions. The schools are nationally renowned and are critical to training both our craft/trades and technical workforce, as well as developing the future leaders of our company.
The Newport News Apprentice School was founded in 1919, and the Ingalls Apprentice School was founded in 1952. The two apprentice schools combined have graduated over 15,500 graduates since their inceptions. The schools are nationally renowned and are critical to training both our craft/trades and technical workforce, as well as developing the future leaders of our company.
Coast Guard, the DoD, the DoE, and other federal agencies. In 2023, 2022, and 2021, approximately 81%, 82%, and 90%, respectively, of our revenues were generated from the U.S. Navy. Intellectual Property We develop new technologies that are incorporated into the products and services we provide to our customers.
Coast Guard, the DoD, the DoE, and other federal agencies. In 2024, 2023, and 2022, approximately 80%, 81%, and 82%, respectively, of our revenues were generated from the U.S. Navy. Intellectual Property We develop new technologies that are incorporated into the products and services we provide to our customers.
Approximately 15 Mission Technologies employees in Klamath Falls, Oregon are covered by a collective bargaining agreement that expires in June 2025. We have not experienced a work stoppage in more than 24 years at Newport News and more than 16 years at Ingalls.
Approximately 15 Mission Technologies employees in Klamath Falls, Oregon are covered by a collective bargaining agreement that expires in June 2025. We have not experienced a work stoppage in more than 25 years at Newport News and more than 17 years at Ingalls.
Regulatory Matters We operate in heavily regulated markets and must comply with a variety of laws and regulations, including those relating to the award, administration, and performance of U.S. Government contracts, as well as legal and regulatory requirements relating to cyber security, environmental protection, and our nuclear operations.
Regulatory Matters We operate in heavily regulated markets and must comply with a variety of laws and regulations, including those relating to the award, administration, and performance of U.S. Government contracts, as well as legal and regulatory requirements relating to, among others, cybersecurity, environmental protection, and our nuclear operations.
In addition, we routinely post on the "Investors" page of our website (www.ir.hii.com) news releases, announcements, and other statements about our business and results of operations, some of which may contain information that may be deemed material to investors. Therefore, we encourage investors to monitor the "Investors" page of our website and review the information we post on that page.
In addition, we routinely post on the "Investors" page of our website (ir.hii.com) news releases, announcements, and other statements about our business and results of operations, some of which may contain information that may be deemed material to investors.
In 2007, we were awarded the construction contract for USS America (LHA 6), the first in a class of enhanced amphibious assault ships designed from the keel up to be an aviation optimized Marine assault platform. We are currently constructing Bougainville (LHA 8) and Fallujah (LHA 9). In 2023, we were awarded a long-lead-time material contract for LHA 10 (unnamed).
In 2007, we were awarded the construction contract for USS America (LHA 6), the first in a class of enhanced amphibious assault ships designed from the keel up to be an aviation optimized Marine assault platform. We are currently constructing Bougainville (LHA 8) and Fallujah (LHA 9).
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. 11
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.
Lucas (DDG 125) in 2023, USS Lenah H. Sutcliffe Higbee (DDG 123) in 2022, and USS Frank E. Petersen Jr. (DDG 121) in 2021. In 2018, we were awarded a multi-year contract for construction of six Arleigh Burke class (DDG 51) destroyers and, in 2020,a contract to construct an additional Arleigh Burke class (DDG 51) destroyer.
Sutcliffe Higbee (DDG 123) in 2022, and USS Frank E. Petersen Jr. (DDG 121) in 2021. In 2018, we were awarded a multi-year contract for construction of six Arleigh Burke class (DDG 51) destroyers and, in 2020,a contract to construct an additional 1 Table of Contents Arleigh Burke class (DDG 51) destroyer.
The first submarine of the Block IV contract was delivered in 2020, and three more submarines have been delivered through 2023. The remaining six boats of the Block IV contract are in the final assembly and test phases of construction.
The first submarine of the Block IV contract was delivered in 2020, and five more submarines have been delivered through 2024. The remaining four boats of the Block IV contract are in the final assembly and test phases of construction.
In 2023, we were awarded a contract to construct Philadelphia (LPD 32). Surface Combatants We are a design agent for, and one of only two companies that constructs, Arleigh Burke class (DDG 51) guided missile destroyers, a class of surface combatant. We have delivered 35 Arleigh Burke class (DDG 51) destroyers to the U.S. Navy, including USS Jack H.
Surface Combatants We are a design agent for, and one of only two companies that constructs, Arleigh Burke class guided missile destroyers ("DDG"), a class of surface combatant. We have delivered 35 Arleigh Burke class (DDG 51) destroyers to the U.S. Navy, including USS Jack H. Lucas (DDG 125) in 2023, USS Lenah H.
In 2023, the team was awarded a contract modification for advance procurement for long lead-time material in support of two additional Block V boats, bringing the total Block V boats to 12. In addition, the team received a contract award for advance procurement of long-lead-time material in support of the first two Block VI boats.
In 2023, the team was awarded a contract modification for advance procurement for long lead-time material in support of two additional Block V boats, bringing the total Block V boats to 12. In 2023 and 2024, the team received contract awards for advance procurement of long-lead-time material in support of all ten Block VI boats.
We also develop new manufacturing processes and systems-integration technologies and processes that we use to produce our products and to provide services to our customers. In addition to owning intellectual property, we license intellectual property rights to and from other parties. The U.S. Government generally receives non-exclusive licenses to certain intellectual property we develop in the performance of U.S.
We also develop new manufacturing processes and systems-integration technologies and processes that we use to produce our products and to provide services to our customers. In addition to owning intellectual property, we license intellectual property rights to and from other parties. The U.S.
While our intellectual property rights are important to our operations, we do not believe that any existing patent, license, or other intellectual property right is of such importance that its loss or termination would have a material impact on our business. Seasonality No material portion of our business is seasonal.
Government may use or authorize other parties to use the intellectual property we license to the government. While our intellectual property rights are important to our operations, we do not believe that any existing patent, license, or other intellectual property right is of such importance that its loss or termination would have a material impact on our business.
We employ programs focused on identifying, reporting, and abating near misses and other programs that aim to recognize, evaluate, and control hazards. We track multiple metrics related to occupational injuries as one of several methods to monitor our safety performance.
We employ programs focused on identifying, reporting, and abating near misses and other programs that aim to recognize, evaluate, and control hazards, and track multiple metrics related to occupational injuries as one of several methods to monitor our safety performance. Available Information We maintain a website at the following address: hii.com.
Accordingly, such information should not be considered part of this report. We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the Securities and Exchange Commission ("SEC") in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act").
We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the Securities and Exchange Commission ("SEC") in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act").
To help us meet this large demand for talent, we have 8 created, developed, and maintain multiple talent pipelines. One of the key components of our approach to workforce development is to “grow our own.” We operate two apprentice schools, one at Ingalls and one at Newport News.
To help us meet the increasing demand for talent, we maintain multiple talent pipelines and continue to review and update our talent management strategies to meet operational needs. One of the key components of our approach to workforce development is to “grow our own.” We operate two apprentice schools, one at Ingalls and one at Newport News.
Fleet Sustainment Fleet sustainment provides comprehensive life-cycle sustainment to the U.S. Navy fleet and other DoD and commercial maritime customers.
This is a modern and distributed approach to U.S. military training . Fleet Sustainment Provides comprehensive life-cycle sustainment to the U.S. Navy fleet and other DoD and commercial maritime customers.
Navy since 1960, comprised of 49 fast attack and 14 ballistic missile submarines. Of the 49 nuclear-powered fast attack submarines currently in 2 active service, 23 were delivered by Newport News. Our nuclear submarine program, located at our Newport News shipyard, includes construction, engineering, design, research, and integrated planning.
Navy since 1960, comprised 2 Table of Contents of 50 fast attack and 14 ballistic missile submarines. Our nuclear submarine program, located at our Newport News shipyard, includes construction, engineering, design, research, and integrated planning.
Any inability to procure the necessary raw materials, components, and other supplies for our products on a timely basis could negatively affect our results of operations, financial condition, or cash flow. In addition, a significant prolonged increase in inflation could negatively impact the cost of raw materials, components, and other supplies.
The inability to procure the necessary raw materials, components, and other supplies for our products on a timely and cost-effective basis has negatively affected, and could continue to negatively affect, our results of operations, financial condition, and/or cash flows.
Beginning in 2009, we received contract awards totaling $8.7 billion for construction preparation, detail design, and construction of the second Gerald R. Ford class (CVN 78) aircraft carrier, John F. Kennedy (CVN 79). In addition, we have received contract awards valued at $15.3 billion for detail design and construction of the Gerald R.
We delivered USS Gerald R. Ford (CVN 78), the first aircraft carrier of the Gerald R. Ford class to the U.S. Navy in 2017. Beginning in 2009, we received contract awards totaling $8.8 billion for construction preparation, detail design, and construction of the second Gerald R. Ford class (CVN 78) aircraft carrier, John F. Kennedy (CVN 79).
The SEC also maintains a website at www.sec.gov that contains reports, proxy statements, and other information about SEC registrants, including us.
Accordingly, such information should not be considered part of this report. The SEC also maintains a website at sec.gov that contains reports, proxy statements, and other information about SEC registrants, including us.
We accrue estimated costs to perform environmental remediation when we determine it is probable we will incur expenses in the future, in amounts we can reasonably estimate, to address environmental conditions at currently or formerly owned or leased operating facilities, or at sites where we are named a Potentially Responsible Party 6 ("PRP") by the U.S.
Such laws and regulations impose liability upon a party for environmental cleanup and remediation costs and damage without regard to negligence or fault on the part of such party and could expose us to liability for the conduct of or conditions caused by third parties. 6 Table of Contents We accrue estimated costs to perform environmental remediation when we determine it is probable we will incur expenses in the future, in amounts we can reasonably estimate, to address environmental conditions at currently or formerly owned or leased operating facilities, or at sites where we are named a Potentially Responsible Party ("PRP") by the U.S.
In addition, over 1,400 apprentices are enrolled in more than 27 crafts and advanced programs at our two shipbuilding segments. From nuclear pipe welders to senior executives, we employ approximately 4,100 apprentice school alumni at Newport News and Ingalls. Approximately 45% of our employees are covered by a total of nine collective bargaining agreements and one site stabilization agreement.
We also employ more than 6,500 veterans across the enterprise. In addition, over 1,400 apprentices are enrolled in more than 27 crafts and advanced programs at our two shipbuilding segments. From nuclear pipe welders to senior executives, we employ approximately 4,100 apprentice school alumni at Newport News and Ingalls.
We also fund the operation of Family Health Centers near our two shipyards, which provide a full range of medical, lab, pharmacy, dental, physical therapy, and vision services. Recruitment, Training, and Workforce Development - Our three segments hire thousands of employees each year. In 2023, we hired approximately 9,500 new employees.
We also fund the operation of Family Health Centers near our two shipyards, which provide a full range of medical, lab, pharmacy, dental, physical therapy, and vision services. 8 Table of Contents Recruitment, Training, and Workforce Development - We are focused on attracting, retaining, and developing a skilled workforce, and in 2024, we hired approximately 10,000 new employees.
Government contracts and unlimited license rights in technical data developed under our U.S. Government contracts when such data is developed 4 entirely at government expense. The U.S. Government may use or authorize other parties to use the intellectual property we license to the government.
Government generally receives non-exclusive 4 Table of Contents licenses to certain intellectual property we develop in the performance of U.S. Government contracts and unlimited license rights in technical data developed under our U.S. Government contracts when such data is developed entirely at government expense. The U.S.
Government contracting requirements increase our contract performance costs and compliance costs and risks. See Risk Factors in Item 1A. Government Contracting We are overseen and audited by the U.S. Government and its agencies, including the U.S. Navy's Supervisor of Shipbuilding, the Defense Contract Audit Agency ("DCAA"), and the Defense Contract Management Agency ("DCMA").
These requirements increase our contract performance costs and compliance costs and risks. See "Risk Factors" in Item 1A for further discussion regarding risks related to regulatory matters. Government Contracting We are overseen and audited by the U.S. Government and its agencies, including the U.S.
We believe we are in material compliance with environmental laws and regulations, and historical environmental compliance costs have not been material to our business. We could be affected by new environmental laws or regulations, including any laws and regulations enacted in response to concerns over climate change, other aspects of the environment, or natural resources.
We believe we are in material compliance with environmental laws and regulations, and historical environmental compliance costs have not been material to our business. We could be affected by new or evolving environmental laws, regulations, or policies.
Employees in our shipbuilding segments with more than 40 years of continuous service achieve the honor of “Master Shipbuilder.” As of December 31, 2023, we had 1,322 Master Shipbuilders at Newport News and 227 at Ingalls. We also employ more than 6,700 veterans across the enterprise.
Our workforce contains many third-, fourth-, and fifth-generation employees, and approximately 1,525 employees with more than 40 years of continuous service. Employees in our shipbuilding segments with more than 40 years of continuous service achieve the honor of “Master Shipbuilder.” As of December 31, 2024, we had 1,260 Master Shipbuilders at Newport News and 213 at Ingalls.
Newport News The core business of our Newport News segment is designing and constructing nuclear-powered aircraft carriers and submarines, and the refueling and overhaul and the inactivation of nuclear-powered aircraft carriers. Our Newport News shipyard is located on approximately 550 acres near the mouth of the James River, which adjoins the Chesapeake Bay.
Our Newport News shipyard is located on approximately 550 acres near the mouth of the James River, which adjoins the Chesapeake Bay. Design, Construction, Refueling and Complex Overhaul, and Inactivation of Aircraft Carriers Engineering, design, and construction of U.S. Navy nuclear aircraft carriers ("CVN") are core to Newport News operations. Aircraft carriers are the largest ships in the U.S.
Ford class (CVN 78) aircraft carriers Enterprise (CVN 80) and Doris Miller (CVN 81). We continue to be the exclusive prime contractor for nuclear aircraft carrier refueling and complex overhaul ("RCOH"). Each RCOH takes nearly four years to complete, with the work accounting for approximately 35% of all maintenance and modernization during an aircraft carrier's 50 year service life.
Each RCOH takes nearly four years to complete, with the work accounting for approximately 35% of all maintenance and modernization during an aircraft carrier's 50 year service life.
In 2018, we were awarded long-lead-time material and construction contracts for Calhoun (NSC 10), which was delivered to the U.S. Coast Guard in 2023, and Friedman (NSC 11), which is currently under construction.
In 2018, we were awarded long-lead-time material and construction contracts for Calhoun (NSC 10), which was delivered to the U.S. Coast Guard in 2023. Newport News The core business of our Newport News segment is designing and constructing nuclear-powered aircraft carriers and submarines, and the refueling and overhaul and the inactivation of nuclear-powered aircraft carriers.
While we have not generally been dependent upon any one supply source, we currently have only one supplier for certain component parts as a result of consolidation in the defense industry. We believe these single source suppliers, as well as our overall supplier base, are adequate to meet our foreseeable needs.
For long-term contracts, we generally solicit price quotations for many of our material requirements from multiple suppliers to ensure competitive pricing. While we have not generally been dependent upon any one supply source, we currently have only one supplier for certain component parts as a result of consolidation in the defense industry.
Navy since 1933, including all ten Nimitz class (CVN 68) aircraft carriers currently in active service, as well as the first ship of the next generation Gerald R. Ford class (CVN 78) aircraft carriers. We delivered USS Gerald R. Ford (CVN 78), the first aircraft carrier of the Gerald R. Ford class to the U.S. Navy in 2017.
Navy's fleet, with a displacement of over 90,000 tons. Newport News has designed and built more than 31 aircraft carriers for the U.S. Navy since 1933, including all ten Nimitz class (CVN 68) aircraft carriers currently in active service, as well as the first ship of the next generation Gerald R. Ford class (CVN 78) aircraft carriers.
These events provide recruitment, recognition, and development opportunities for our diverse workforce. Available Information We maintain a website at the following address: www.hii.com. References to our websites in this report are provided as a matter of convenience and do not constitute, and should not be viewed as, incorporation by reference of the information contained on, or available through, the website.
Therefore, we encourage investors to monitor the "Investors" page of our website and review the information we post on that page. 9 Table of Contents References to our websites in this report are provided as a matter of convenience and do not constitute, and should not be viewed as, incorporation by reference of the information contained on, or available through, the website.
We mitigate some supply risk by negotiating long-term agreements with certain raw material suppliers, and we mitigate inflation risk related to raw material to an extent through price escalation provisions in certain customer contracts.
We endeavor to mitigate supply chain risk through various measures, such as negotiating long-term agreements with certain raw material suppliers and through price escalation provisions in certain customer contracts. See "Risk Factors" in Item 1A for further discussion regarding risks related to raw materials.
Government generally has the ability to terminate contracts, in whole or in part, with little or no prior notice, for convenience or for default based upon performance.
Government has the ability to decrease or withhold contract payments if it determines significant deficiencies exist in one or more of our business systems. 5 Table of Contents The U.S. Government generally has the ability to terminate contracts, in whole or in part, with little or no prior notice, for convenience or for default based upon performance.
Our business systems subject to audit or review include our accounting systems, purchasing systems, government property management systems, estimating systems, earned value management systems, and material management accounting systems. The U.S. Government has the ability to decrease or withhold contract payments if it determines significant deficiencies exist in one or more of our business systems. The U.S.
Government agencies also evaluate the adequacy of our business systems and processes relative to U.S. Government requirements. Our business systems subject to audit or review include our accounting systems, purchasing systems, government property management systems, estimating systems, earned value management systems, and material management accounting systems. The U.S.
Navy's current fleet of Arleigh Burke class (DDG 51) destroyers and are positioned well to be awarded future contracts for surface combatant ships as well. Key competitive factors in the Mission Technologies segment include technology capabilities; innovative cyber advances and artificial intelligence; the ability to develop and implement complex, integrated solutions; the ability to meet delivery schedules; and cost effectiveness.
Key competitive factors in the Mission Technologies segment include technology capabilities; innovative cyber advances and artificial intelligence; the ability to develop and implement complex, integrated solutions; the ability to meet delivery schedules; and cost effectiveness. Our success depends on investments in our people, technologies, and products to meet the evolving needs of our customers.
Our Mission Technologies segment competes domestically and internationally against large aerospace and defense ("A&D") companies, primarily L3 Harris, Amentum, ManTech, Leidos, and, increasingly, small businesses serving the intelligence community. To a lesser extent, our lines of business compete on certain contracts with major prime A&D contractors, including Lockheed Martin, General Dynamics, Northrop Grumman, Raytheon, and Boeing.
To a lesser extent, our lines of business compete on certain contracts with major prime A&D contractors, including Lockheed Martin, General Dynamics, Northrop Grumman, RTX Corporation, and Boeing.
These agencies evaluate our contract performance, cost structures, and compliance with applicable laws, regulations, and standards. If an audit uncovers improper or illegal activities, we may be subject to administrative, civil, or criminal proceedings, which could result in fines, penalties, repayments, or compensatory, treble, or other damages. Certain U.S.
If an audit uncovers improper or illegal activities, we may be subject to administrative, civil, or criminal proceedings, which could result in fines, penalties, repayments, or compensatory, treble, or other damages. Certain U.S. Government findings against a contractor can also lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges. U.S.
CEW&S CEW&S works within our nation’s intelligence and cyber operations communities to defend U.S. interests in cyberspace and anticipate emerging threats. Our capabilities in cybersecurity, network architecture, reverse engineering, software, and hardware development uniquely enable our ability to support sensitive missions for the U.S. military and federal agency partners.
Our capabilities in cybersecurity, network architecture, reverse engineering, software, and hardware development uniquely enable our ability to support sensitive missions for the U.S. military and federal agency partners. We also develop, test, and integrate leading-edge AI and machine learning algorithms to optimize and accelerate the nation’s mission-critical systems and platforms.
Newport News has three collective bargaining agreements covering represented employees, which expire in April 2024, February 2027, and December 2027. Newport News craft workers employed at the Kesselring Site near Saratoga Springs, New York are represented under an indefinite DoE site agreement. Ingalls has five collective bargaining agreements covering represented employees, all of which expire in March 2026.
Approximately 45% of our employees are covered by a total of nine collective bargaining agreements. Newport News has three collective bargaining agreements covering represented employees, which expire in February 2027, December 2027 and April 2029. Ingalls has five collective bargaining agreements covering represented employees, all of which expire in March 2026.
Our success depends upon our ability to develop, market, produce, and deliver our products and services at costs consistent with our customers' expectations, as well as our ability to provide the workforce, technologies, facilities, equipment, and financial capacity needed to deliver those products and services with maximum efficiency. 7 Human Capital Resources We recognize that our employees are our most important resources and serve as the foundation for our ability to achieve financial and strategic objectives.
To remain competitive, we must be able to identify emerging technology trends and consistently provide superior service, while understanding customer priorities and maintaining customer relationships. 7 Table of Contents Our success depends upon our ability to develop, market, produce, and deliver our products and services at costs and on schedules consistent with our customers' expectations, as well as our ability to provide the workforce, technologies, facilities, equipment, and financial capacity needed to deliver those products and services with maximum efficiency.
Our capabilities include C5ISR systems and operations; the application of Artificial Intelligence ("AI") and machine learning to battlefield decisions; defensive and offensive cyberspace strategies and electronic warfare ("CEW&S"); live, virtual, constructive solutions ("LVC"); unmanned, autonomous systems; fleet sustainment; and critical nuclear operations.
Capabilities including command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance systems and operations; the application of artificial intelligence and machine learning to battlefield decisions; defense and offensive cyberspace strategies and electronic warfare; uncrewed autonomous systems; live, virtual, and constructive training solutions; fleet sustainment; and critical nuclear operations. 3 Table of Contents Command, control, computers, communications, cyber, intelligence, surveillance, and reconnaissance ("C5ISR") Designs, develops, integrates, and manages the sensors, systems, and other assets necessary to support integrated C5ISR operations and accelerated decision-making.
Our employees are critical to driving operational execution, meeting customer expectations, delivering strong financial performance, advancing innovation, and maintaining a strong quality and compliance program. Our leaders believe each employee contributes to our success. We have over 44,000 employees. We are the largest industrial employer in Virginia and the largest private employer in Mississippi.
Human Capital Resources We recognize that our employees are our most important resources and serve as the foundation for our ability to achieve financial and strategic objectives. Our employees are critical to driving operational execution, meeting customer expectations, delivering strong financial performance, advancing innovation, and maintaining a strong quality and compliance program.
We expect approximately 22% of backlog at December 31, 2023, to be converted into sales in 2024. Raw Materials We rely on third parties to provide raw materials. The most significant material we use is steel. Other materials we use in large quantities include paint, aluminum, pipe, electrical cables, electronic components, fittings, custom machine items, and sensors.
The most significant material we use is steel. Other materials we use in large quantities include paint, aluminum, pipe, electrical cables, electronic components, fittings, custom machine items, and sensors. In connection with our U.S. Government contracts, we are required to procure certain materials and component parts from supply sources approved by the U.S. Government.
Kesselring Site, a research and development facility in New York that supports the U.S. Navy. Mission Technologies Our Mission Technologies segment develops integrated solutions that enable today’s connected, all-domain force.
Kesselring Site, a research and development facility in New York that supports the U.S. Navy, which were completed in 2024. Mission Technologies Our Mission Technologies segment is organized into four groups, All-Domain Operations, Warfare Systems, Global Security, and Uncrewed Systems, and specializes in a wide range of services and products across our capabilities.
The timing of our revenue recognition is based on multiple factors, including the timing of contract awards, the incurrence of contract costs, contract cost estimation, and unit deliveries. See Note 2: Summary of Significant Accounting Policies in Item 8. Backlog As of December 31, 2023 and 2022, our total backlog was approximately $48.1 billion and $47.1 billion, respectively.
See Note 2: Summary of Significant Accounting Policies in Item 8. Backlog As of December 31, 2024 and 2023, our total backlog was approximately $48.7 billion and $48.1 billion, respectively. We expect approximately 21% of backlog at December 31, 2024, to be converted into sales in 2025. Raw Materials We rely on third parties to provide raw materials.
We also develop, test, and integrate leading-edge AI and machine learning algorithms to optimize and accelerate the nation’s mission-critical systems and platforms. LVC LVC training connects live environments with virtual platforms and simulated (constructive) threats to prepare trainees through integrated, real world scenarios before they are in harm’s way. LVC is a modern and distributed approach to U.S. military training.
Live, virtual, and constructive solutions ("LVC") A trusted partner to our military customers, our capabilities include designing, developing, and operating the largest live, virtual, and constructive enterprise that prepares warfighters for cross-domain battle. Our training connects live environments with virtual platforms and simulated (constructive) threats to prepare trainees through integrated, real-world scenarios before they are in harm’s way.
The LPD program is a long-running production program of expeditionary warfare ships in which we have generated efficiencies through ship-over-ship learning. We delivered USS Fort Lauderdale (LPD 28) in 2022, and we are currently constructing Richard M. McCool Jr . (LPD 29), Harrisburg (LPD 30), and Pittsburgh (LPD 31).
In 2023, we were awarded a long-lead-time material contract for Helmand Province (LHA 10), and in 2024, we were awarded a contract modification for the detail design and construction of Helmand Province (LHA 10). The LPD program is a long-running production program of expeditionary warfare ships. We delivered USS Fort Lauderdale (LPD 28) in 2022 and Richard M.
We employ individuals specializing in 19 crafts and trades, with approximately 7,000 engineers and designers and approximately 3,700 employees with advanced degrees. Our workforce contains many third-, fourth-, and fifth-generation employees, and approximately 1,600 employees with more than 40 years of continuous service.
Our leaders believe each employee contributes to our success. We have over 44,000 employees. We are the largest industrial employer in Virginia and the largest private employer in Mississippi. We employ individuals specializing in 19 crafts and trades, with approximately 7,000 engineers and designers and approximately 4,600 employees with advanced degrees.
Removed
Design, Construction, Refueling and Complex Overhaul, and Inactivation of Aircraft Carriers Engineering, design, and construction of U.S. Navy nuclear aircraft carriers ("CVN") are core to Newport News operations. Aircraft carriers are the largest ships in the U.S. Navy's fleet, with a displacement of over 90,000 tons. Newport News has designed and built more than 31 aircraft carriers for the U.S.
Added
McCool Jr . (LPD 29) in 2024. We are currently constructing Harrisburg (LPD 30), and Pittsburgh (LPD 31). In 2023, we were awarded a contract to construct Philadelphia (LPD 32). In 2024, we were awarded a multi-ship procurement contract for the construction of Travis Manion (LPD 33), LPD 34 (unnamed), and LPD 35 (unnamed).
Removed
Our domain expertise and advanced technologies support our mission partners across the globe. 3 C5ISR C5ISR designs, develops, integrates, and manages the sensors, systems and other assets necessary to support integrated ISR operations and accelerated decision-making. These business activities provide data fusion and mission management capabilities for the DoD, the combatant commands, and the intelligence community.
Added
In addition, we have received contract awards valued at $15.3 billion for detail design and construction of the Gerald R. Ford class (CVN 78) aircraft carriers, Enterprise (CVN 80) and Doris Miller (CVN 81). We continue to be the exclusive prime contractor for nuclear aircraft carrier refueling and complex overhaul ("RCOH").
Removed
All of these materials are currently available in adequate supply. In connection with our U.S. Government contracts, we are required to procure certain materials and component parts from supply sources approved by the U.S. Government. For long-term contracts, we generally solicit price quotations for many of our material requirements from multiple suppliers to ensure competitive pricing.
Added
These business activities provide data fusion and mission management capabilities for the DoD, the combatant commands, and the intelligence community. Cyber and electronic warfare ("CEW&S") Works within our nation’s intelligence and cyber operations communities to defend U.S. interests in cyberspace and anticipate emerging threats.
Removed
Government findings against a contractor can also lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges. U.S. Government agencies also evaluate the adequacy of our business systems and processes relative to U.S. Government requirements.
Added
See "Risk Factors" in Item 1A for further discussion regarding risks related to intellectual property. Seasonality No material portion of our business is seasonal. The timing of our revenue recognition is based on multiple factors, including the timing of contract awards, the incurrence of contract costs, contract cost estimation, and unit deliveries.
Removed
Such laws and regulations impose liability upon a party for environmental cleanup and remediation costs and damage without regard to negligence or fault on the part of such party and could expose us to liability for the conduct of or conditions caused by third parties.
Added
We have experienced challenges with access to, and the pricing of, certain raw materials, components, and other supplies due to, in part, labor shortages and inflation.
Removed
Our success depends on investments in our people, technologies, and products to meet the evolving needs of our customers. To remain competitive, we must be able to identify emerging technology trends and consistently provide superior service, while understanding customer priorities and maintaining customer relationships.
Added
Navy's Supervisor of Shipbuilding, the Defense Contract Audit Agency ("DCAA"), and the Defense Contract Management Agency ("DCMA"). These agencies evaluate our contract performance, cost structures, and compliance with applicable laws, regulations, and standards.

… 13 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

110 edited+54 added−22 removed100 unchanged
Biggest changeGeneral Risk Factors Our insurance coverage may be inadequate to cover all of our significant risks or our insurers may deny coverage of material losses we incur, which could adversely affect our profitability and financial position.
Biggest changeGeneral Risk Factors • Our insurance coverage may be inadequate to cover all of our significant risks or our insurers may deny coverage of material losses we incur, which could adversely affect our profitability and financial position. • Market volatility and adverse capital market conditions may affect our ability to access cost-effective sources of funding and may expose us to risks associated with the financial viability of suppliers and subcontractors. • If we fail to manage acquisitions, joint ventures, equity investments, and other transactions successfully or if acquired businesses or equity investments fail to perform as expected, our financial results, business, and future prospects could be harmed. • We can provide no assurance we will continue to increase our dividends or repurchase shares of our common stock.
Demand for our products and services can also be affected by shifts in customer priorities resulting from changes in military strategy and planning. In response to the need for less expensive alternatives and the increasing proliferation of advanced weapons, future strategy reassessments by the DoD may result in decreased demand for our shipbuilding programs, including our aircraft carrier programs.
Demand for our products and services also can be affected by shifts in customer priorities resulting from changes in military strategy and planning. In response to the need for less expensive alternatives and the increasing proliferation of advanced weapons, future strategy reassessments by the DoD may result in decreased demand for our shipbuilding programs, including our aircraft carrier programs.
Changes in procurement practices favoring incentive-based fee arrangements, different award fee criteria (such as the evaluation of environmental factors), non-traditional contract provisions, and cost mandates from the government may affect our profitability and the predictability of our profit rates. The U.S. Government is also pursuing alternatives to shift additional responsibility and performance risks to contractors.
Changes in procurement practices favoring incentive-based fee arrangements, different award fee criteria (such as the evaluation of environmental factors), non-traditional contract provisions, and cost mandates from the government may affect our profitability and the predictability of our profit rates. The U.S. Government also is pursuing alternatives to shift additional responsibility and performance risks to contractors.
Our competitive environment is also affected by bid protests from unsuccessful bidders on new program awards. As the competitive environment intensifies, the number of bid protests may increase. Bid protests can result in an award decision being overturned, requiring a re-bid of the contract.
Our competitive environment also is affected by bid protests from unsuccessful bidders on new program awards. As the competitive environment intensifies, the number of bid protests may increase. Bid protests can result in an award decision being overturned, requiring a re-bid of the contract.
As a result, we are not always able to anticipate techniques or to implement adequate security barriers or other preventative measures. Our suppliers, subcontractors, and other business partners also face cyber security and other security threats.
As a result, we are not always able to anticipate techniques or to implement adequate security barriers or other preventative measures. Our suppliers, subcontractors, and other business partners also face cyber and other security threats.
Our nuclear operations are subject to various safety related requirements imposed by the U.S. Navy, the DoE, and the Nuclear Regulatory Commission. In the event of noncompliance, these agencies may increase regulatory oversight, impose fines, or shut down our operations, depending on their assessment of the severity of the noncompliance.
Our nuclear operations are subject to various safety related requirements imposed by the U.S. Navy, the DoE, and the U.S. Nuclear Regulatory Commission. In the event of noncompliance, these agencies may increase regulatory oversight, impose fines, or shut down our operations, depending on their assessment of the severity of the noncompliance.
In addition, new or revised security and safety requirements imposed by the U.S. Navy, DoE, and Nuclear Regulatory Commission could require substantial capital and other expenditures. Subject to certain requirements and limitations, our contracts with the U.S. Navy and DoE generally provide for indemnity by the U.S. Government for costs arising out of or resulting from our nuclear operations.
In addition, new or revised security and safety requirements imposed by the U.S. Navy, DoE, and U.S. Nuclear Regulatory Commission could require substantial capital and other expenditures. Subject to certain requirements and limitations, our contracts with the U.S. Navy and DoE generally provide for indemnity by the U.S. Government for costs arising out of or resulting from our nuclear operations.
Our Restated Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, other employees, or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware or as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery, (iv) any action asserting a claim arising pursuant to any provision of our Certificate of Incorporation or Restated Bylaws, (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the General Corporation 24 Law of the State of Delaware, or (vi) any action governed by the internal affairs doctrine.
Our Restated Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, other employees, or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the General Corporation Law of the State of Delaware or as to which the General Corporation Law of the State of Delaware confers jurisdiction on the Court of Chancery, (iv) any action asserting a claim arising pursuant to any provision of our Certificate of Incorporation or Restated Bylaws, (v) any action asserting an “internal corporate claim” as that term is defined in Section 115 of the General Corporation Law of the State of Delaware, or (vi) any action governed by the internal affairs doctrine.
To be successful, we conduct due diligence to identify valuation issues and potential loss contingencies; negotiate transaction terms; 25 complete and close complex transactions; integrate acquired companies and employees; and realize anticipated operating synergies efficiently and effectively. Acquisition, joint venture, and investment transactions often require substantial management resources and have the potential to divert our attention from our existing business.
To be successful, we conduct due diligence to identify valuation issues and potential loss contingencies; negotiate transaction terms; complete and close complex transactions; integrate acquired companies and employees; and realize anticipated operating synergies efficiently and effectively. Acquisition, joint venture, and investment transactions often require substantial management resources and have the potential to divert our attention from our existing business.
Our operating performance is also dependent upon personnel who hold security clearances and receive substantial training to work on certain programs or tasks and can be difficult to replace on a timely basis if we experience unplanned attrition. A growing portion of our current workforce is nearing or eligible for retirement.
Our performance also is dependent upon personnel who hold security clearances and receive substantial training to work on certain programs or tasks and can be difficult to replace on a timely basis if we experience unplanned attrition. A growing portion of our current workforce is nearing or eligible for retirement.
In addition to the DoD's business practice initiatives, the DCMA and DCAA have implemented cost recovery/cost savings initiatives to prioritize cost recovery/savings. As a result, we have experienced and may continue to 13 experience a higher number of audits and/or lengthened periods of time required to close open audits.
In addition to the DoD's business practice initiatives, the DCMA and DCAA have implemented cost recovery/cost savings initiatives to prioritize cost recovery/savings. As a result, we have experienced and may continue to experience a higher number of audits and/or lengthened periods of time required to close open audits.
Our operations are subject to and affected by federal, state, and local environmental laws and regulations relating to the discharge, storage, treatment, handling, disposal, and remediation of certain materials, substances, and wastes used in our operations. Future environmental laws or regulations could also impact us.
Our operations are subject to and affected by federal, state, local, and foreign environmental laws and regulations relating to the discharge, storage, treatment, handling, disposal, and remediation of certain materials, substances, and wastes used in our operations. Future environmental laws or regulations could also impact us.
The payment of cash dividends and repurchases of our common stock are subject to limitations under applicable law and the discretion of our board of directors, considered in the context of then current conditions, including our earnings, other operating results, and capital requirements.
The payment of cash dividends and repurchases of our common stock are subject to limitations under applicable law and the discretion of our board of directors, considered in the context of current conditions, including our earnings, other operating results, and capital requirements.
We expect competition for future shipbuilding programs to be intense. We compete with another large defense contractor for contracts to build surface combatants , submarines, and large deck amphibious ships, and smaller shipyards have entered the market for surface combatants.
We expect competition for future shipbuilding programs to continue to be intense. We compete with another large defense contractor for contracts to build surface combatants , submarines, and large deck amphibious ships, and smaller shipyards have entered the market for surface combatants.
For additional information relating to the U.S. defense budget, see the Business Environment section under Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7. 12 Current U.S.
For additional information relating to the U.S. defense budget, see the Business Environment section under Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7. Current U.S.
Such risks include disruptions or restrictions on our employees’ ability to work or work effectively, 18 temporary closures of our facilities or the facilities of our customers or suppliers, delays in supplier deliveries, and delays in customer contract awards.
Such risks include disruptions or restrictions on our employees’ ability to work or work effectively, temporary closures of our facilities or the facilities of our customers or suppliers, delays in supplier deliveries, and delays in customer contract awards.
Government, including the terms and conditions under which we do so, which may have an adverse impact on our business, financial condition, results of operations, and cash flows.
Government, including the terms and conditions under which we do so, which may have an adverse impact on our business, financial condition, results of operations, or cash flows.
If we are unable to continue to compete successfully we may generate lower revenues and lose market share, which would negatively impact our financial condition, results of operations, and cash flows and could impact our ability to compete for future defense contracts. Although we are the only company currently capable of refueling nuclear-powered aircraft carriers, two existing U.S.
If we are unable to continue to compete successfully, we may generate lower revenues and lose market share, which would negatively impact our financial condition, results of operations, and cash flows and our ability to compete for future defense contracts could be impacted. Although we are the only company currently capable of refueling nuclear-powered aircraft carriers, two existing U.S.
Even the most well-protected information, networks, systems, and facilities remain potentially vulnerable because attempted 19 security breaches, particularly cyber attacks and cyber intrusions or disruptions, regularly occur and will continue to occur in the future and the techniques used in such attempts are constantly evolving and generally are not recognized until launched against a target.
Even the most well-protected information, networks, systems, and facilities remain potentially vulnerable because attempted security breaches, particularly cybersecurity attacks and cyber intrusions or disruptions, regularly occur and will continue to occur in the future and the techniques used in such attempts are constantly evolving and generally are not recognized until launched against a target.
Changes to Department of Defense business practices could have a material effect on DoD's procurement process and adversely impact our current programs and potential new awards. Our industry has experienced, and we expect will continue to experience, significant changes to business practices resulting from greater focus on affordability, efficiencies, business systems, recovery of costs, and a reprioritization of defense funding.
Changes to DoD business practices could have a material effect on DoD's procurement process and adversely impact our current programs and potential new awards. Our industry has experienced, and we expect will continue to experience, significant changes to business practices resulting from greater focus on affordability, efficiencies, business systems, recovery of costs, and a reprioritization of defense funding.
We also provide integrated solutions that enable today's connected, all-domain force, including C5ISR systems and operations; the application of Artificial Intelligence and machine learning to battlefield decisions; defense and offensive cyberspace strategies and electronic warfare; unmanned autonomous systems; live, virtual, and constructive training solutions; fleet sustainment; and critical nuclear operations.
We also provide integrated solutions that enable today's connected, all-domain force, including C5ISR systems and operations; the application of artificial intelligence and machine learning to battlefield decisions; defense and offensive cyberspace strategies and electronic warfare; uncrewed autonomous systems; live, virtual, and constructive training solutions; fleet sustainment; and critical nuclear operations.
Government contracts are subject to various risks, including customer political and budgetary constraints and processes, changes in customer short-term and long-term strategic plans, the timing of contract awards, significant changes in contract scheduling, recessionary impacts on government spending, intense contract award and funding competition, challenges forecasting costs and schedules for bids on developmental and sophisticated technical work, and contractor suspension or debarment in the event of certain legal or regulatory violations.
Government contracts are subject to various risks, including customer political and budgetary constraints and processes, changes in customer short-term and long-term strategic plans, the timing of contract awards, significant changes in contract scheduling, recessionary impacts on government spending, intense contract award and funding 12 Table of Contents competition, challenges forecasting costs and schedules for bids on developmental and sophisticated technical work, and contractor suspension or debarment in the event of certain legal or regulatory violations.
Substantially all of our revenues in 2023 were derived from products and services sold to the U.S. Government, and we expect this to continue for the foreseeable future. In addition, substantially all of our backlog as of December 31, 2023, was related to products and services deliverable to the U.S. Government. Our U.S.
Substantially all of our revenues in 2024 were derived from products and services sold to the U.S. Government, and we expect this to continue for the foreseeable future. In addition, substantially all of our backlog as of December 31, 2024, was related to products and services deliverable to the U.S. Government. Our U.S.
We also may incur unanticipated costs or expenses, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, employee retention, transaction-related or other litigation, and other liabilities. Any of the foregoing could adversely affect our business and results of operations. Joint ventures and other non-controlling investments operate under shared control with other parties.
We also may incur unanticipated costs or expenses, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, employee retention, transaction-related or other litigation, and other liabilities. Any of the foregoing could adversely affect our business and results of operations. 27 Table of Contents Joint ventures and other non-controlling investments operate under shared control with other parties.
The inability of our suppliers or subcontractors to meet expectations could also result in our need to transition to alternate parties, which could result in significant incremental cost and delay, or the need for us to provide other supplemental support to our existing suppliers and subcontractors.
The inability of our suppliers or subcontractors to meet expectations could also result in our need to transition to alternate parties, if available, which could result in significant incremental cost and delay, or the need for us to provide other supplemental support to our existing suppliers and subcontractors.
Navy, the Nuclear Regulatory Commission, or the DoE; • Reputational damage; • Potential liabilities arising out of a nuclear incident whether or not it is within our control; and • Regulatory noncompliance and loss of authorizations or indemnifications necessary for our operations.
Navy, the U.S. Nuclear Regulatory Commission, or the DoE; • Reputational damage; • Potential liabilities arising out of a nuclear incident whether or not it is within our control; and • Regulatory noncompliance and loss of authorizations or indemnifications necessary for our operations.
As a result, investors have less insight into our classified business or our business overall. However, historically the business risks associated with our work on classified programs have not differed materially from those of our other government contracts.
As a result, investors have less insight into our classified business and our business overall. However, historically the business risks associated with our work on classified programs have not differed materially from those of our other government contracts.
We also could be adversely affected by, or liable for, actions taken by joint ventures that we do not control, including violations of anti-corruption, import and export, taxation, and anti-boycott laws. We can provide no assurance we will continue to increase our dividends or to repurchase shares of our common stock at current levels.
We also could be adversely affected by, or liable for, actions taken by joint ventures that we do not control, including violations of anti-corruption, import and export, taxation, and anti-boycott laws. We can provide no assurance we will continue to increase our dividends or repurchase shares of our common stock.
Breaches of our information technology can be expected to lead to the following types of adverse consequences: losses or misuse of sensitive information or capabilities; theft or corruption of data; harm to personnel, infrastructure or products; financial costs and liabilities; protracted interruptions of our operations and performance; significant recovery and restoration expenses; degraded performance on existing contracts; the misuse of our products; and exposure to reputational damage, potential liability, or the loss of current or future contracts, including work on sensitive or classified systems for the U.S.
Breaches of our information technology may lead to the following types of adverse consequences: losses or misuse of sensitive information or capabilities; theft or corruption of data; harm to personnel, infrastructure or products; financial costs and liabilities; protracted interruptions of our operations and performance; significant recovery and restoration expenses; degraded performance on existing contracts; the misuse of our products; and exposure to reputational damage, potential liability, or the loss of current or future contracts, including work on sensitive or classified systems for the U.S.
Moreover, actions that are inconsistent with our values, including with respect to product safety or quality, legal or regulatory compliance, financial reporting, or people management, may cause us significant reputational damage. Changes in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial results. Changes in U.S.
Moreover, actions that are inconsistent with our culture and values, including with respect to product safety or quality, legal or regulatory compliance, financial reporting, or people management, may cause us significant reputational damage. Changes in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial results.
We have taken actions intended to mitigate the risk related to our defined benefit pension plans through pension risk transfer transactions whereby we purchase group annuity contracts (“GACs”) from insurance companies using assets from the pension trust. We expect to continue to evaluate such transactions in the future.
We have taken certain actions intended to mitigate the risk related to our defined benefit pension plans including pension risk transfer transactions whereby we purchase group annuity contracts (“GACs”) from insurance companies using assets from the pension trust. We expect to continue to evaluate such transactions in the future.
While we implement countermeasures to address the risks posed by cyber security threats, external and internal threat actors continuously seek to evade our cyber security countermeasures to gain unauthorized and unlawful access to our information technology infrastructure, assets, and data, both on premises and in the cloud.
While we implement robust countermeasures to mitigate the risks posed by cyber security threats, external and internal threat actors continuously seek to evade our cyber security countermeasures to gain unauthorized and unlawful access to our information technology infrastructure, assets, and data, both on premises and in the cloud.
Our ability to satisfy our obligations on a timely basis are adversely affected if one or 16 more of our suppliers or subcontractors are unable to provide agreed-upon products, materials, or services in a timely, compliant, and cost-effective manner, or they otherwise fail to satisfy contractual requirements.
Our ability to satisfy our obligations on a timely basis are adversely affected if one or 17 Table of Contents more of our suppliers or subcontractors are unable to provide agreed-upon products, materials, or services in a timely, compliant, and cost-effective manner, or they otherwise fail to satisfy contractual requirements.
Government has, in certain instances, withheld contract payments upon its assessment that deficiencies exist with one or more of our business systems, which can have a material impact on the timing of our cash receipts. The U.S.
Government has, in certain instances, withheld 22 Table of Contents contract payments upon its assessment that deficiencies exist with one or more of our business systems, which can have a material impact on the timing of our cash receipts. In addition, the U.S.
Should insurance or other risk transfer mechanisms be unavailable or insufficient to recover material costs associated with natural or environmental disasters or other events, we could experience a material adverse effect on our financial position, results of operations, or cash flows.
If insurance or other risk transfer mechanisms is unavailable or insufficient to recover material costs associated with natural or environmental disasters or other events, we could experience a material adverse effect on our financial position, results of operations, or cash flows.
We encourage you to consider carefully the risk factors described below when evaluating the information contained in this report as the outcome of one or more of these risks could have a material adverse effect on our financial position, results of operations and/or cash flows. Industry and Economic Risk Factors We depend on the U.S.
We encourage you to consider carefully the risk factors described below when evaluating the information contained in this report as the outcome of one or more of these risks could have a material adverse effect on our financial position, results of operations and/or cash flows.
Such insurance, however, may not be sufficient to cover our costs in the event of an accident or business interruption relating to our commercial nuclear operations, which could have a material adverse effect on our financial position, results of operations, or cash flows. 22 Our reputation and our ability to conduct business may be impacted by the improper conduct of employees, agents, or business partners.
Such insurance, however, may not be sufficient to cover our costs in the event of an accident or business interruption relating to our commercial nuclear operations, which could have a material adverse effect on our financial position, results of operations, or cash flows. 24 Table of Contents Our reputation and our ability to conduct business may be impacted by the improper conduct of employees, agents, suppliers, subcontractors or business partners.
For example, the military conflicts between Russia and Ukraine and Israel and Hamas have resulted in increased security assistance to Ukraine and Israel, respectively. Changes in defense budgetary priorities as a result of such conflicts or otherwise could have an adverse impact on our results.
For example, the military conflicts between Russia and Ukraine and Israel and Hamas have resulted in increased security assistance to Ukraine and Israel, respectively. Changes in defense budgetary priorities as a result of such conflicts or otherwise could have an adverse impact on the programs in which we participate and, ultimately, our results.
Any improper actions by our employees, agents, business partners, and others working on our behalf could subject us to administrative, civil, or criminal investigations and monetary and non-monetary penalties, including suspension or debarment, which could have a material adverse effect on our financial position, results of operations, or cash flows.
Any improper actions by our employees, agents, business partners, those with whom we do business and others working on our behalf could subject us to administrative, civil, or criminal investigations and enforcement actions, monetary and non-monetary penalties, including suspension or debarment, which could have a material adverse effect on our financial position, results of operations, or cash flows.
We cannot predict the impact of changes to customer priorities on existing, follow-on, replacement, or future programs.
We cannot predict the impact of changes to 13 Table of Contents customer priorities on existing, follow-on, replacement, or future programs.
Government regulations also provide that certain allegations against a contractor may lead to suspension or debarment from government contracts or suspension of export privileges. Suspension or debarment would have a material adverse effect on our business because of our reliance on government contracts and authorizations.
Government regulations also provide that certain allegations against a contractor may lead to suspension or debarment from government contracts or suspension of export privileges. Suspension or debarment or criminal resolutions in particular could have a material adverse effect on our business because of our reliance on government contracts and authorizations.
Cost overruns would adversely impact our results of operations, which are dependent on our ability to maximize our earnings from our contracts, and the potential risk would be greater if our contracts shifted toward a greater percentage of fixed-price contracts, particularly firm fixed-price contracts.
Cost overruns have adversely impacted, and may continue to impact, our results of operations, which are dependent on our ability to maximize our earnings from our contracts. This risk would be greater if our contracts shifted toward a greater percentage of fixed-price contracts, particularly firm fixed-price contracts.
Government contracts can extend for years, and unforeseen events, such as technology difficulties, fluctuations in the price of raw materials, a significant increase in or sustained period of higher inflation, supplier issues, including equipment delays, labor market conditions, and cost overruns, can result in the contract price becoming less favorable or even unprofitable to us over time.
Government contracts often extend for years, and unforeseen events, such as technology difficulties, fluctuations in the price of raw materials, a significant increase in or sustained period of higher inflation, supplier issues, including equipment delays, challenging labor market conditions, unexpected rework, and cost overruns, have in the past resulted, and may in the future result, in contract prices becoming less favorable or even unprofitable to us over time.
Allegations of impropriety can also cause significant reputational damage. The U.S. Government also has the ability to decrease or withhold contract payments if it determines significant deficiencies exist in one or more of our business systems. The U.S.
Government also has the ability to decrease or withhold contract payments if it determines significant deficiencies exist in one or more of our business systems. The U.S.
Government's convenience, a contractor is normally able to recover costs already incurred on the contract and profit on incurred costs up to the amount authorized under the contract, but not the profit that would have been earned had the contract been completed.
In the event of termination of a contract for the U.S. Government's convenience, a contractor is normally able to recover costs already incurred on the contract and profit on incurred costs up to the amount authorized under the contract, but not the profit that would have been earned had the contract been completed.
For new shipbuilding programs, we estimate, negotiate, and contract for construction of ships that are not completely designed, which subjects our risk assessments, revenue and cost estimates, and assumptions to the variability of the final ship design and an evolving scope of work.
For new shipbuilding programs, our estimates are based on contracts for the construction of ships that are not completely designed, which subjects our risk assessments, revenue and cost estimates, and related assumptions to the variability of the final ship design and an evolving scope of work.
Such issues and our responses and corrective actions could have a material adverse effect on our financial position, results of operations, or cash flows. 17 Changes in key estimates and assumptions associated with postretirement benefit plans, such as discount rates and assumed long-term returns on assets, actual investment returns on our pension plan assets, and legislative and regulatory actions could significantly affect our financial position, results of operations, and cash flows.
Changes in key estimates and assumptions associated with postretirement benefit plans, such as discount rates and assumed long-term returns on assets, actual investment returns on our pension plan assets, and legislative and regulatory actions could significantly affect our financial position, results of operations, and cash flows.
Due to the specialized nature of our business, our performance is dependent upon our ability to identify, attract, train, and retain a workforce with the requisite skills in multiple areas, including: engineering, nuclear, trades and crafts, manufacturing, information technology, and cybersecurity.
Due to the specialized nature of our business, our performance is dependent upon our ability to identify, attract, train, and retain a qualified workforce with the requisite skills in multiple areas, including: engineering, nuclear, trades and crafts, manufacturing, information technology, and cybersecurity, and who are able to operate effectively consistent with our values and culture.
Our pension and retiree health care costs are dependent upon various estimates and assumptions, particularly with respect to the discount rate and expected long-term rates of return on plan assets, which to a large extent are reflective of the financial markets and economic conditions.
Our pension and retiree health care costs are dependent upon various estimates and assumptions, including regarding discount rates, mortality and expected long-term rates of return on plan assets, which to a large extent reflect the financial markets and economic conditions.
Our compliance program incorporates detailed compliance plans and related compliance controls, policies, procedures, and training designed to prevent and detect misconduct by employees, agents, business partners, and others working on our behalf, including suppliers and subcontractors, that would violate the laws of the jurisdictions in which we operate, including laws governing payments to government officials, the protection of export controlled or classified information, cost accounting and billing, competition, and data privacy.
We have implemented detailed compliance plans and related compliance controls, policies, procedures, and training, in addition to contractual terms, as applicable, designed to prevent and detect misconduct by our employees, agents, business partners, and others working on our behalf, including suppliers and subcontractors, that would violate the applicable laws of the jurisdictions in which we operate, including laws governing improper payments to government officials, the protection of export controlled or classified information, false claims, procurement integrity cost accounting and billing, competition, and information security and data privacy.
In addition, trade secrets may be independently developed by competitors. Our intellectual property is also subject to challenge, invalidation, infringement, misappropriation, or circumvention by third parties. In the event of infringement, misappropriation, breach of a confidentiality agreement, or unauthorized disclosure of proprietary information, we may not have adequate legal remedies to protect our intellectual property.
Our intellectual property is also subject to challenge, invalidation, infringement, misappropriation, or circumvention by third parties. In the event of infringement, misappropriation, breach of a confidentiality agreement, or unauthorized disclosure of proprietary information, we may not have adequate legal remedies to protect our 25 Table of Contents intellectual property.
While we believe pension risk transfer transactions are beneficial, future transactions, depending on their size, could result in us making additional contributions to the pension trust and/or require us to recognize noncash settlement charges in earnings in the applicable reporting period.
While we believe pension risk transfer transactions are beneficial, future transactions, depending on their size, could result in us making additional contributions to the pension trust and/or require us to recognize noncash settlement charges in earnings in the applicable reporting period. We could be negatively impacted by security threats, including cyber security threats, and related disruptions.
Approximately 51% of our revenues in 2023 were generated under fixed-price incentive contracts, approximately 44% were generated under cost-type contracts, approximately 2% were generated under time and material contracts, and approximately 3% were generated under firm fixed-price contracts.
Approximately 48% of our revenues in 2024 were generated under fixed-price incentive contracts, approximately 47% were generated under cost-type contracts, approximately 2% were generated under time and material contracts, and approximately 3% were generated under firm fixed-price contracts.
When Congress is unable to pass appropriations bills before the beginning of a fiscal year, a continuing resolution can be enacted to provide stopgap funding for a specified period of time at a specified rate, often the prior year’s appropriations level. When the U.S.
Government programs are subject to annual congressional budget authorization and appropriation processes. When Congress is unable to pass appropriations bills before the beginning of a fiscal year, a continuing resolution can be enacted to provide stopgap funding for a specified period of time at a specified rate, often the prior year’s appropriations level. When the U.S.
A significant increase in contract costs from our original cost estimates on one or more contracts could have a material adverse effect on our financial position, results of operations, or cash flows. Our ability to recover costs and realize profits on contracts with our U.S.
A significant increase in contract costs from our original cost estimates on one or more contracts could have a material adverse effect on our financial position, results of operations, or cash flows.
Navy or other contractors or developed by us. Problems associated with development or implementation of these new technologies or design changes in the construction process can lead to delays in the design and construction schedule. The risks associated with new technologies or design changes during construction can both increase the cost of a ship and delay delivery.
Navy or other contractors or developed by us. Problems associated with development or implementation of these new technologies or design changes in the construction process can lead to delays in the design and construction schedule.
Government and its agencies that are subject to security restrictions (e.g., contracts involving classified information and classified programs), which preclude the dissemination of information and technology that is classified for national security purposes under applicable law and regulation.
We derive a portion of our revenues from programs with the U.S. Government and its agencies that are subject to security restrictions (e.g., contracts involving classified information and classified programs), which preclude the dissemination of information and technology that is classified for national security purposes under applicable law and regulation.
Significant delays or reductions in appropriations for our programs, changes in customer priorities, and potential contract terminations could have a material adverse effect on our financial position, results of operations, or cash flows. We are directly dependent upon Congressional funding of U.S. Navy, U.S. Coast Guard, and other federal agency programs.
Significant delays or reductions in appropriations for our programs and/or changes in customer priorities could have a material adverse effect on our financial position, results of operations, or cash flows. As a U.S. Government contractor, we depend on Congressional funding of our U.S. Navy, U.S. Coast Guard, and other federal programs. U.S.
Any litigation, claim, audit, or investigation, even if fully indemnified or insured, could negatively impact our reputation among our customers and the public and make it more difficult for us to compete effectively or acquire adequate insurance in the future. See Note 14: Investigations, Claims, and Litigation in Item 8.
Any litigation, claim, dispute, audit, or investigation, even if pending or not ultimately substantiated or if fully indemnified or insured, could negatively impact our reputation among our customers and the public and make it more difficult for us to compete effectively or acquire adequate insurance in the future.
Government has from time to time recommended that certain of our contract prices be reduced, or that certain costs allocated to our contracts be disallowed, which sometimes involve substantial dollar amounts. In response to U.S. Government audits, investigations, and inquiries, we have also made adjustments from time to time to our contract prices and costs allocated to our government contracts.
Government has from time to time recommended that certain of our contract prices be reduced, or that certain costs allocated to our contracts be disallowed. In response to U.S. Government audits, investigations, and inquiries, we have adjusted our contract prices and costs allocated to our government contracts.
Such cyber security threats include security breaches (whether through cyber attack, cyber intrusion, or insider threat) via the internet; malicious software, including ransomware; computer viruses; attachments to emails; persons inside our organization or with access to systems inside our organization; subcontractors or suppliers; or other significant disruptions of our information technology networks and related systems or those of our suppliers or subcontractors.
These cyber security threats are continuously evolving and include security breaches (whether through 19 Table of Contents cyber attack, cyber intrusion, or insider threat) via the internet; malicious software, including ransomware; computer viruses; attachments to emails; persons inside our organization or with access to systems inside our organization; subcontractors or suppliers; or other significant disruptions of our information technology networks and related systems or those of our suppliers or subcontractors, including through the use of new and emerging technologies like artificial intelligence.
Even when a bid protest does not result in a re-bid, resolution of the matter typically extends the time until contract performance can begin, which can reduce our earnings in the period in which the contract would otherwise be performed. Changes in estimates used in contract accounting could affect our profitability and our overall financial position.
Even when a bid protest does not result in a re-bid, resolution of the matter typically extends the time until contract performance can begin, which can reduce our earnings in the period in which the contract would otherwise be performed.
These organizations have varying levels of cyber security expertise and safeguards, and their relationships with U.S. Government contractors increases the likelihood that they are or will be targeted by the same cyber security threats we face.
These organizations have varying levels of cyber security expertise and safeguards, and their relationships with U.S. Government contractors increases the likelihood that they are or will be impacted by the same cyber security threats we face. We also face increasing and evolving disclosure and reporting obligations related to cybersecurity events.
We are subject to various administrative, civil, and criminal litigation, environmental claims, income tax proceedings, compliance proceedings, customer claims, and audits and investigations, which can divert financial and management resources and result in fines, penalties, compensatory, treble, or other damages, or nonmonetary sanctions.
We are and may become subject to various legal proceedings across a broad array of matters, including but not limited to, administrative, civil, and criminal litigation, environmental claims, income tax proceedings, compliance proceedings, customer claims, enforcement actions, audits, investigations and other legal proceedings, which can divert financial and management resources and result in fines, penalties, compensatory, treble, or other damages, or nonmonetary sanctions.
Navy and coastal defense surface ships for the U.S. Coast Guard, as well as the refueling and overhaul and inactivation of nuclear-powered ships for the U.S. Navy.
The majority of our business consists of the design, construction, repair, and maintenance of nuclear-powered ships and non-nuclear ships for the U.S. Navy and coastal defense surface ships for the U.S. Coast Guard, as well as the refueling and overhaul and inactivation of nuclear-powered ships for the U.S. Navy.
Higher interest rates resulting from inflationary pressures can also impact the fair values of our contracts. Moreover, if we fail to meet contract deadlines or specifications, we may be required to renegotiate contracts on less favorable terms, be forced to pay penalties or liquidated damages, or suffer major losses if the customer exercises its right to terminate.
Moreover, if we fail to meet contract deadlines or specifications, we may be required to 16 Table of Contents renegotiate contracts on less favorable terms, be forced to pay penalties or liquidated damages, or suffer major losses if the customer exercises its right to terminate.
Fixed price contracts increase the risk that we may not recover all of our costs or will generate less profit or a loss. Under each type of contract, our 15 operating results could be adversely affected if we are unable to control costs, particularly if we are unable to negotiate an increase in contract price with our customers. U.S.
Under each type of contract, our operating results could be adversely affected if we are unable to control costs, particularly if we are unable to negotiate an increase in contract price, or recover increased costs, with our customers. U.S.
We have experienced in the past work stoppages, strikes, and other labor disruptions associated with the collective bargaining of new labor agreements. If we experience such events in the future, we could incur additional costs or work delays that could adversely affect programs served by employees who are covered by collective bargaining agreements.
If we experience such events in the future, or if our employees pursue new collective representation, we could incur additional costs or work delays that could adversely affect programs served by employees who are covered by collective bargaining agreements.
We also rely upon proprietary technology, information, processes, and know-how that are not protected by patents. We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors, and other parties, as well as through other measures. These agreements and other measures may not, however, adequately protect the trade secrets on which we depend.
We seek to protect this information through trade secret or confidentiality agreements with our employees, consultants, subcontractors, and other parties, as well as through other measures. These agreements and other measures may not, however, adequately protect the trade secrets on which we depend. In addition, trade secrets may be independently developed by competitors.
To the extent we lose experienced personnel, it is critical that we hire new qualified personnel, develop and train inexperienced employees, and successfully manage the short and long-term transfer of critical knowledge and skills. Competition for talent is intense, and this may affect our ability to successfully attract or retain personnel with the requisite skills or clearances.
To the extent we lose experienced personnel, it is critical that we hire new qualified personnel, develop and train inexperienced employees, and successfully manage the short and long-term transfer of critical knowledge and skills.
We compete with commercial technology companies outside of the shipbuilding and defense industry for qualified technical positions. Such companies may be able to offer more attractive compensation and other benefits to candidates, including in the recruitment of our existing employees.
Such companies may be able to offer more attractive compensation and other benefits to candidates, including in the recruitment of our existing employees.
The negative resolution of litigation, claims, or investigations could have a material adverse effect on our financial position, results of operations, or cash flows.
The negative resolution of investigations, claims, litigation, disputes or other legal proceedings could have a material adverse effect on our financial position, results of operations, or cash flows. See Note 13: Investigations, Claims, and Litigation in Item 8. Environmental costs could have a material adverse effect on our financial position, results of operations, or cash flows.
If a determination is made that we engaged in illegal activities or that we are not presently responsible, as defined under the FAR, we may be subject to reductions in contract values, contract modifications or terminations, penalties, fines, repayments, compensatory, treble, or other damages, or suspension or debarment, any of which could have a material adverse effect on our financial position, results of operations, or cash flows.
In addition, If we are found to have engaged in illegal activities, or are found to not be presently responsible, as defined under the FAR, we may be subject to reductions in contract values, contract modifications or terminations, penalties, fines, repayments, compensatory, treble, or other damages, or suspension or debarment.
Disruptions and performance issues from our suppliers and subcontractors, or inconsistencies between our contractual obligations to our customers and our agreements with our subcontractors and suppliers, could adversely impact our ability to meet our commitments to customers.
Disruptions and performance issues from our suppliers and subcontractors, unanticipated cost growth for the products and services they provide, or inconsistencies between our contractual obligations to our customers and our agreements with our subcontractors and suppliers, have adversely impacted and may continue to impact our ability to meet our commitments to customers.
Our products cannot always be tested and proven and are otherwise subject to unforeseen problems, including premature failure of elements that cannot be accessed for repair or replacement, substandard quality or workmanship, and unexpected degradation of product performance.
The risks associated with new technologies or design changes during construction can both increase the cost of a ship and delay delivery. 18 Table of Contents Our products cannot always be tested and proven and are otherwise subject to unforeseen problems, including premature failure of elements that cannot be accessed for repair or replacement, substandard quality or workmanship, and unexpected degradation of product performance.
Such competition increases the risk we may not be the successful bidder on future U.S. Navy engineering proposals, including aircraft carrier research and development, submarine design, and surface combatant and amphibious assault ship program contracts.
Such competition increases the risk we may not be the successful bidder on future U.S. Navy engineering proposals, including aircraft carrier research and development, submarine design, and surface combatant and amphibious assault ship program contracts. Mission Technologies competes domestically and internationally against large A&D companies, primarily L3 Harris, Amentum, ManTech, Leidos, and, increasingly, small businesses serving the intelligence community.
See the Contracts section under Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 7. Our level of indebtedness and our ability to make payments on or service our indebtedness may adversely affect our financial and operating activities or our ability to incur additional debt.
Our level of indebtedness and our ability to make payments on or service our indebtedness may adversely affect our financial and operating activities or our ability to incur additional debt.
If an audit uncovers improper or illegal activities, we may be subject to administrative, civil, or criminal proceedings, which could result in fines, penalties, 20 repayments, or compensatory, treble, or other damages. Certain U.S. Government findings against a contractor can also lead to suspension or debarment from future U.S. Government contracts or the loss of export privileges .
If an audit uncovers improper or illegal activities, we may be subject to administrative, civil, or criminal proceedings, which could result in fines, penalties, repayments, sanctions, compensatory, treble, or other damages. Allegations of impropriety can also cause significant reputational damage. The U.S.
If we incur costs in excess of existing funding on a contract, we may not recover those costs unless and until additional funds are appropriated. We cannot predict the extent to which total funding or funding for individual programs will be included, increased, or reduced as part of the annual budget process or through continuing resolutions or individual supplemental appropriations.
We cannot predict the extent to which total funding or funding for individual programs will be included, increased, or reduced as part of the annual budget process or through continuing resolutions or individual supplemental appropriations.
(federal or state) or foreign tax laws and regulations, or their interpretation and application, including those with retroactive effect, could result in increases in our tax expense and affect profitability and cash flows.
We are subject to income and other taxes in the U.S. (federal and state) and foreign jurisdictions. Changes in applicable tax laws and regulations or their interpretation and application, including those with retroactive effect, have affected and could affect our tax expense and profitability and cash flows.

… 106 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+0 added−0 removed13 unchanged
Biggest changeGovernance In 2019, our board of directors established a standing Cybersecurity Committee, which is tasked with oversight of the Cybersecurity Program, including: (i) strategy and governance; (ii) operations; and (iii) risk management and regulatory compliance. 26 The Cybersecurity Committee responsibilities include: • reviewing our enterprise cybersecurity strategy and framework, including our assessment of cybersecurity threats and risk, data security programs, and our management and mitigation of cybersecurity and information technology risks and potential breach incidents; • reviewing any significant cybersecurity incident that has occurred, reports to or from regulators with respect thereto, and steps that have been taken to mitigate against reoccurrence; • evaluating the effectiveness of our cyber risk management and data security programs measured against our cybersecurity threat landscape; • assessing the effectiveness of our data breach incident response plan; • reviewing and assessing our information technology disaster recovery capabilities; and • reviewing our assessment of cybersecurity threats and risk associated with our supply chain and actions we are taking to address such threats and risks.
Biggest changeThe Cybersecurity Committee responsibilities include: • reviewing our enterprise cybersecurity strategy and framework, including our assessment of cybersecurity threats and risk, data security programs, and our management and mitigation of cybersecurity and information technology risks and potential breach incidents; • reviewing any significant cybersecurity incident that has occurred, reports to or from regulators with respect thereto, and steps that have been taken to mitigate against reoccurrence; • evaluating the effectiveness of our cyber risk management and data security programs measured against our cybersecurity threat landscape; • assessing the effectiveness of our data breach incident response plan; 28 Table of Contents • reviewing and assessing our information technology disaster recovery capabilities; and • reviewing our assessment of cybersecurity threats and risk associated with our supply chain and actions we are taking to address such threats and risks.
We also have an executive cybersecurity and information technology steering committee comprised of our Chief Executive Officer, CIO, and other members of our executive leadership team, whose primary responsibilities include: • approving containment and remediation procedures for escalated cyber incidents; • activating, when appropriate, a crisis management team response; and 27 • approving certain incident response measures.
We also have an executive cybersecurity and information technology steering committee comprised of our Chief Executive Officer, CIO, and other members of our executive leadership team, whose primary responsibilities include: • approving containment and remediation procedures for escalated cyber incidents; • activating, when appropriate, a crisis management team response; and • approving certain incident response measures.
Risk Factors," specifically the risks titled "We could be negatively impacted by security threats, including cyber security threats, and related disruptions" and "Our earnings and profitability depend, in part, upon subcontractor performance and raw material and component availability and pricing," the sophistication of cyber threats continues to increase, and the preventative actions we take to reduce the risk of cyber incidents and protect our systems and information may be insufficient.
"Risk Factors," specifically the risks titled "We could be negatively impacted 29 Table of Contents by security threats, including cyber security threats, and related disruptions" and "Our earnings and profitability depend, in part, upon subcontractor performance and raw material and component availability and pricing," the sophistication of cyber threats continues to increase, and the preventative actions we take to reduce the risk of cyber incidents and protect our systems and information may be insufficient.
He has specific experience in the following cybersecurity areas: global IT security policy & governance; information risk management; cybersecurity strategic planning and integration; enterprise infrastructure cybersecurity engineering; incident response and remediation; global supply chain cyber risk management; cybersecurity awareness training; M&A cyber risk management; Cloud security; identity management; disaster recovery; and cybersecurity damage assessment.
He has specific experience in the following cybersecurity areas: Cyber & IT security policy & governance; information risk management; cybersecurity strategic planning and integration; enterprise infrastructure; cybersecurity engineering; incident response and remediation; supply chain cyber risk management; cybersecurity awareness training; M&A cyber risk management; cloud security; identity management; disaster recovery; cybersecurity regulation compliance; and cybersecurity damage assessment.
We also maintain a supply chain cybersecurity compliance and risk mitigation program to assess material cybersecurity risk from third parties.
We also maintain a supply chain cybersecurity compliance and risk mitigation program to assess material cybersecurity risk from third parties. Governance In 2019, our board of directors established a standing Cybersecurity Committee, which is tasked with oversight of the Cybersecurity Program, including: (i) strategy and governance; (ii) operations; and (iii) risk management and regulatory compliance.
Our CISO has 30 years of experience in cybersecurity, IT networking and electronic security, and holds a degree in Information Systems (Cybersecurity concentration).
Our CISO has 33 years of experience in cybersecurity and information technology, over 20 years working with NAVSEA 08Y, approval authority of HII’s unclassified Naval Nuclear Propulsion Information networks, and holds a Master’s degree in Cybersecurity.

Item 2. Properties

Properties — owned and leased real estate

5 edited+1 added−0 removed5 unchanged
Biggest changeUnmanned Systems had operations in Pocasset, Massachusetts and Hampton, Virginia, and Nuclear and Environmental Services had operations in Los Alamos, New Mexico; Aiken, South Carolina; and Newport News, Virginia. We maintain a robust capital sustainment and maintenance program and believe our physical facilities and equipment are generally well maintained, in good operating condition, and satisfactory for our current needs.
Biggest changeWe maintain a robust capital sustainment and maintenance program and believe our physical facilities and equipment are generally well maintained, in good operating condition, and satisfactory for our current needs.
We have undertaken substantial capital expenditure programs at our Ingalls and Newport News segments intended to increase our competitiveness and enable us to meet future obligations under our growing shipbuilding program backlog. 28
We have undertaken substantial capital expenditure programs at our Ingalls and Newport News segments intended to increase our competitiveness and enable us to meet future obligations under our growing shipbuilding program backlog.
We anticipate continued use of this facility for the remaining 43 years of the lease and beyond. Newport News - The primary properties comprising our Newport News operating segment are located in Newport News, Virginia.
We anticipate continued use of this facility for the remaining 42 years of the lease and beyond. Newport News - The primary properties comprising our Newport News operating segment are located in Newport News, Virginia.
Mission Technologies - The properties comprising our Mission Technologies operating segment are located throughout the United States, United Kingdom, and Australia. Our Mission Technologies headquarters are located in Fairfax and McLean, Virginia. Mission Technologies leases and owns properties related to its operations in approximately 52 cities, consisting of both corporate support locations and contract performance locations.
Mission Technologies - The properties comprising our Mission Technologies operating segment are located throughout the United States, United Kingdom, and Australia. Our Mission Technologies headquarters are in Fairfax and McLean, Virginia. We lease and own properties related to our operations in approximately 53 cities, consisting of both corporate support locations and contract performance locations.
Mission Technologies also has employees working at customer sites throughout the United States and in other countries. As of December 31, 2023, C5ISR, CEW&S, and LVC had major operations in Annapolis and Hanover, Maryland; Syracuse, New York; Beavercreek and Dayton, Ohio; and Alexandria, Virginia. Fleet sustainment had operations in Portsmouth, New Hampshire; Philadelphia, Pennsylvania; and Suffolk and Virginia Beach, Virginia.
We also have employees working at customer sites throughout the United States and in other countries. As of December 31, 2024, we had major operations in Honolulu, Hawaii; Odon, Indiana; Annapolis Junction and Hanover, Maryland; Syracuse, New York; Beavercreek and Dayton, Ohio; Alexandria, Suffolk, and Virginia Beach, Virginia; Pocasset, Massachusetts; and Panama City Beach, Florida.
Added
In January 2025, the Company acquired substantially all of the assets of W International SC, LLC and Vivid Empire SC, LLC (collectively “W International”), a South Carolina-based complex metal fabricator specializing in the manufacture of shipbuilding structures, modules, and assemblies. The acquired manufacturing facility operates within the Newport News segment as Newport News Shipbuilding – Charleston Operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS For information regarding legal proceedings, see Note 14: Investigations, Claims, and Litigation in Item 8. Consistent with the requirements of Securities and Exchange Commission Regulation S-K, Item 103, our threshold for disclosing any environmental legal proceeding involving a governmental authority is potential monetary sanctions that our management believes will exceed $1 million.
Biggest changeITEM 3. LEGAL PROCEEDINGS For information regarding legal proceedings, see Note 13: Investigations, Claims, and Litigation in Item 8. Consistent with the requirements of Securities and Exchange Commission Regulation S-K, Item 103, our threshold for disclosing any environmental legal proceeding involving a governmental authority is potential monetary sanctions that our management believes will exceed $1 million. 30 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed2 unchanged
Biggest changeStock Performance Graph The following graph compares the total return on a cumulative basis of $100 invested in our common stock on January 1, 2019, to the Standard & Poor's ("S&P") 500 Index and the S&P Aerospace and Defense Select Index. ◦ The cumulative total return assumes reinvestment of dividends. ◦ The S&P Aerospace & Defense Select Index is comprised of The Boeing Company, General Dynamics Corporation, Huntington Ingalls Industries, Inc., L3 Harris Technologies, Inc., Lockheed Martin Corporation, Northrop Grumman Corporation, RTX Corporation, Textron, Inc., and TransDigm Group Incorporated, among other companies. 30 Purchases of Equity Securities by the Issuer and Affiliated Purchasers Repurchases under our stock repurchase program are made from time to time at management's discretion in accordance with applicable federal securities laws.
Biggest changeStock Performance Graph The following graph compares the total return on a cumulative basis of $100 invested in our common stock on December 31, 2019, to the Standard & Poor's ("S&P") 500 Index and the S&P Aerospace and Defense Select Index. ◦ The cumulative total return assumes reinvestment of dividends. ◦ The S&P Aerospace & Defense Select Index is comprised of The Boeing Company, General Dynamics Corporation, Huntington Ingalls Industries, Inc., L3 Harris Technologies, Inc., Lockheed Martin Corporation, Northrop Grumman Corporation, RTX Corporation, Textron, Inc., and TransDigm Group 32 Table of Contents Incorporated, among other companies.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the New York Stock Exchange under the symbol "HII". Stockholders The approximate number of our common stockholders was 12,644 as of January 26, 2024.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed on the New York Stock Exchange under the symbol "HII". Stockholders The approximate number of our common stockholders was 11,921 as of January 31, 2025.
Annual Meeting of Stockholders Our Annual Meeting of Stockholders is currently scheduled to be held on May 1, 2024. Dividend For the years ended December 31, 2023 and 2022, we declared dividends on common stock totaling $5.02 and $4.78 per share, respectively.
Annual Meeting of Stockholders Our Annual Meeting of Stockholders is currently scheduled to be held on April 30, 2025. Dividend For the years ended December 31, 2024 and 2023, we declared dividends on common stock totaling $5.25 and $5.02 per share, respectively.
All repurchases of HII common stock have been recorded as treasury stock. The following table summarizes information relating to purchases made by or on behalf of the Company of shares of the Company's common stock during the quarter ended December 31, 2023.
The following table summarizes information relating to purchases made by or on behalf of the Company of shares of the Company's common stock during the quarter ended December 31, 2024.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) 1,2 October 1, 2023 to October 31, 2023 65,076 $ 214.52 65,076 $ 937.4 November 1, 2023 to November 30, 2023 48,276 231.48 48,276 926.2 December 1, 2023 to December 31, 2023 48,100 241.27 48,100 914.6 Total 161,452 $ 227.56 161,452 $ 914.6 1 From the stock repurchase program's inception through December 31, 2023, we have purchased 13,976,868 shares at an average price of $163.51 per share for a total of $2.3 billion. 2 In November 2012, we announced the establishment of our stock repurchase program.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) 1,2 October 1, 2024 to October 31, 2024 — $ — — $ 1,352.3 November 1, 2024 to November 30, 2024 — — — 1,352.3 December 1, 2024 to December 31, 2024 — — — 1,352.3 Total — $ — — $ 1,352.3 1 From the stock repurchase program's inception through December 31, 2024, we have purchased 14,584,709 shares at an average price of $167.82 per share for a total of $2.4 billion. 2 In November 2012, we announced the establishment of our stock repurchase program.
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers Repurchases under our stock repurchase program are made from time to time at management's discretion in accordance with applicable federal securities laws. All repurchases of HII common stock have been recorded as treasury stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 54 REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 54 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME 58 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 59 CONSOLIDATED STATEMENTS OF CASH FLOWS 61 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 62 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 63
Biggest changeFINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 56 REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 56 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME 59 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 60 CONSOLIDATED STATEMENTS OF CASH FLOWS 62 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 63 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 64
Item 6. [RESERVED] 31 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 31 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 52 Item 8.
Item 6. [RESERVED] 33 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 33 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 54 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

108 edited+24 added−31 removed82 unchanged
Biggest changeThe increase was primarily driven by the settlement of a representations and warranties insurance claim related to the acquisition of Hydroid and higher volumes described above, partially offset by a contract loss and lower equity income from the disposition of our investment in an unconsolidated ship repair and specialty fabrication joint venture. 43 PRODUCT AND SERVICE REVENUES AND COST ANALYSIS The following table presents segment sales and service revenues by both product and service: Segment Sales and Service Revenues ($ in millions) Year Ended December 31 2023 over 2022 2022 over 2021 Segment Information 2023 2022 2021 Dollars Percent Dollars Percent Ingalls Product $ 2,495 $ 2,372 $ 2,357 $ 123 5 % $ 15 1 % Service 248 186 156 62 33 % 30 19 % Intersegment 9 12 15 (3) (25) % (3) (20) % Total Ingalls 2,752 2,570 2,528 182 7 % 42 2 % Newport News Product 5,053 4,821 4,543 $ 232 5 % 278 6 % Service 1,077 1,026 1,109 $ 51 5 % (83) (7) % Intersegment 3 5 11 $ (2) (40) % (6) (55) % Total Newport News 6,133 5,852 5,663 281 5 % 189 3 % Mission Technologies Product 116 90 100 $ 26 29 % (10) (10) % Service 2,465 2,181 1,259 $ 284 13 % 922 73 % Intersegment 118 116 117 $ 2 2 % (1) (1) % Total Mission Technologies 2,699 2,387 1,476 312 13 % 911 62 % Segment Totals Product $ 7,664 $ 7,283 $ 7,000 $ 381 5 % $ 283 4 % Service 3,790 3,393 2,524 $ 397 12 % 869 34 % Total Segment $ 11,454 $ 10,676 $ 9,524 $ 778 7 % $ 1,152 12 % 44 The following table presents segment cost of sales and service revenues by both product and service: Segment Cost of Sales and Service Revenues ($ in millions) Year Ended December 31 2023 over 2022 2022 over 2021 Segment Information 2023 2022 2021 Dollars Percent Dollars Percent Ingalls Product $ 2,031 $ 1,931 $ 1,885 $ 100 5 % $ 46 2 % Service 207 162 132 45 28 % 30 23 % Intersegment 9 12 15 (3) (25) % (3) (20) % Total Ingalls 2,247 2,105 2,032 142 7 % 73 4 % Newport News Product 4,254 4,097 3,856 $ 157 4 % 241 6 % Service 900 858 941 $ 42 5 % (83) (9) % Intersegment 3 5 11 $ (2) (40) % (6) (55) % Total Newport News 5,157 4,960 4,808 197 4 % 152 3 % Mission Technologies Product 121 73 85 $ 48 66 % (12) (14) % Service 2,223 1,970 1,100 $ 253 13 % 870 79 % Intersegment 118 116 117 $ 2 2 % (1) (1) % Total Mission Technologies 2,462 2,159 1,302 303 14 % 857 66 % Segment Totals Product $ 6,406 $ 6,101 $ 5,826 $ 305 5 % $ 275 5 % Service 3,330 2,990 2,173 $ 340 11 % 817 38 % Total Segment (1) $ 9,736 $ 9,091 $ 7,999 $ 645 7 % $ 1,092 14 % (1) Operating FAS/CAS Adjustment is excluded from segment cost of product sales and service revenues.
Biggest changeThe increase was primarily driven by higher volume and performance in CEW&S, higher performance in fleet sustainment, and higher equity income from operating investments, partially offset by the settlement of a representations and warranties insurance claim related to the acquisition of Hydroid in 2023. 45 Table of Contents PRODUCT AND SERVICE REVENUES AND COST ANALYSIS The following table presents segment sales and service revenues by both product and service: Segment Sales and Service Revenues ($ in millions) Year Ended December 31 2024 over 2023 2023 over 2022 Segment Information 2024 2023 2022 Dollars Percent Dollars Percent Ingalls Product $ 2,424 $ 2,495 $ 2,372 $ (71) (3) % $ 123 5 % Service 335 248 186 87 35 % 62 33 % Intersegment 8 9 12 (1) (11) % (3) (25) % Total Ingalls 2,767 2,752 2,570 15 1 % 182 7 % Newport News Product 4,921 5,053 4,821 $ (132) (3) % 232 5 % Service 1,045 1,077 1,026 $ (32) (3) % 51 5 % Intersegment 3 3 5 $ — — % (2) (40) % Total Newport News 5,969 6,133 5,852 (164) (3) % 281 5 % Mission Technologies Product 119 116 90 $ 3 3 % 26 29 % Service 2,691 2,465 2,181 $ 226 9 % 284 13 % Intersegment 127 118 116 $ 9 8 % 2 2 % Total Mission Technologies 2,937 2,699 2,387 238 9 % 312 13 % Segment Totals Product $ 7,464 $ 7,664 $ 7,283 $ (200) (3) % $ 381 5 % Service 4,071 3,790 3,393 $ 281 7 % 397 12 % Total Segment $ 11,535 $ 11,454 $ 10,676 $ 81 1 % $ 778 7 % 46 Table of Contents The following table presents segment cost of sales and service revenues by both product and service: Segment Cost of Sales and Service Revenues ($ in millions) Year Ended December 31 2024 over 2023 2023 over 2022 Segment Information 2024 2023 2022 Dollars Percent Dollars Percent Ingalls Product $ 2,070 $ 2,031 $ 1,931 $ 39 2 % $ 100 5 % Service 294 207 162 87 42 % 45 28 % Intersegment 8 9 12 (1) (11) % (3) (25) % Total Ingalls 2,372 2,247 2,105 125 6 % 142 7 % Newport News Product 4,276 4,254 4,097 $ 22 1 % 157 4 % Service 865 900 858 $ (35) (4) % 42 5 % Intersegment 3 3 5 $ — — % (2) (40) % Total Newport News 5,144 5,157 4,960 (13) — % 197 4 % Mission Technologies Product 102 121 73 $ (19) (16) % 48 66 % Service 2,416 2,223 1,970 $ 193 9 % 253 13 % Intersegment 127 118 116 $ 9 8 % 2 2 % Total Mission Technologies 2,645 2,462 2,159 183 7 % 303 14 % Segment Totals Product $ 6,448 $ 6,406 $ 6,101 $ 42 1 % $ 305 5 % Service 3,575 3,330 2,990 $ 245 7 % 340 11 % Total Segment (1) $ 10,023 $ 9,736 $ 9,091 $ 287 3 % $ 645 7 % (1) Operating FAS/CAS Adjustment is excluded from segment cost of product sales and service revenues.
We monitor our policies and procedures with respect to our contracts on a regular basis to ensure consistent application under similar terms and conditions, as well as compliance with all applicable government regulations. In addition, the DCAA routinely audits the costs we incur that are allocated to U.S.
We monitor our policies and procedures with respect to our contracts on a regular basis to ensure consistent application under similar terms and conditions, as well as compliance with all applicable government regulations. In addition, the DCAA routinely audits the costs we incur that are allocated to U.S. Government contracts.
Cost of sales for both product sales and service revenues consists of materials, labor, and subcontracting costs, as well as an allocation of indirect costs for overhead. We manage the type and amount of costs at the contract level, which is the basis for estimating our total costs at completion of our contracts.
Cost of Sales and Service Revenues Cost of sales for both product sales and service revenues consists of materials, labor, and subcontracting costs, as well as an allocation of indirect costs for overhead. We manage the type and amount of costs at the contract level, which is the basis for estimating our total costs at completion of our contracts.
In addition, we have received awards for detail design and construction of Enterprise (CVN 80) and Doris Miller (CVN 81). This category also includes the class' non-recurring engineering. The class is expected to bring improved warfighting capability, quality of life improvements for sailors, and reduced life cycle costs. 51 Legend class National Security Cutter Design and build the U.S.
In addition, we have received awards for detail design and construction of Enterprise (CVN 80) and Doris Miller (CVN 81). This category also includes the class' non-recurring engineering. The class is expected to bring improved warfighting capability, quality of life improvements for sailors, and reduced life cycle costs. Legend class National Security Cutter Design and build the U.S.
Dollars, are rated Aa or better by nationally recognized statistical rating agencies, have a minimum outstanding issue of $50 million as of the measurement date, and are not callable, convertible, or index-linked.
Dollars, are rated Aa or better by nationally recognized statistical rating agencies, have a minimum outstanding issue of $50 million as of the measurement date, and are not convertible or index-linked.
We expect cash generated from operations in 2024, in combination with our current cash and cash equivalents, as well as existing borrowing facilities, to be sufficient to service debt and retiree benefit plans, meet contractual obligations, and fund capital expenditures for at least the next 12 calendar months beginning January 1, 2024 and beyond such 12-month period based on our current business plans.
We expect cash generated from operations in 2025, in combination with our current cash and cash equivalents, as well as existing borrowing facilities, to be sufficient to service debt and retiree benefit plans, meet contractual obligations, and fund capital expenditures for at least the next 12 calendar months beginning January 1, 2025 and beyond such 12-month period based on our current business plans.
See Note 7: Revenue in Item 8. • Firm Fixed-Price Contracts - A firm fixed-price contract is a contract in which the specified scope of work is agreed to for a price that is predetermined by bid or negotiation and not generally subject to adjustment regardless of costs incurred by the contractor. • Fixed-Price Incentive Contracts - Fixed-price incentive contracts provide for reimbursement of the contractor's allowable costs, but are subject to a cost-share limit that affects profitability.
See Note 6: Revenue in Item 8. • Firm Fixed-Price Contracts - A firm fixed-price contract is a contract in which the specified scope of work is agreed to for a price that is predetermined by bid or negotiation and not generally subject to adjustment regardless of costs incurred by the contractor. • Fixed-Price Incentive Contracts - Fixed-price incentive contracts provide for reimbursement of the contractor's allowable costs, but are subject to a cost-share limit that affects profitability.
See Note 17: Employee Pension and Other Postretirement Benefits in Item 8. We calculate our retirement related benefit plan costs under both CAS and U.S. GAAP Financial Accounting Standards ("FAS"). The calculations under CAS and FAS require significant judgment. CAS prescribes the determination, allocation, and recovery of retirement related benefit plan costs on U.S.
See Note 16: Employee Pension and Other Postretirement Benefits in Item 8. We calculate our retirement related benefit plan costs under both CAS and U.S. GAAP Financial Accounting Standards ("FAS"). The calculations under CAS and FAS require significant judgment. CAS prescribes the determination, allocation, and recovery of retirement related benefit plan costs on U.S.
The change in unrecognized prior service costs (credits) in 2023 resulted from plan amendments and the amortization of previously accumulated prior service costs (credits). Workers' Compensation Our operations are subject to federal and state workers' compensation laws. We maintain self-insured workers' compensation plans and participate in federally administered second injury workers' compensation funds.
The change in unrecognized prior service costs (credits) in 2024 resulted from plan amendments and the amortization of previously accumulated prior service costs (credits). Workers' Compensation Our operations are subject to federal and state workers' compensation laws. We maintain self-insured workers' compensation plans and participate in federally administered second injury workers' compensation funds.
As of December 31, 2023 and 2022, these plans were sufficiently funded on an ERISA basis so as not to be subject to benefit payment restrictions. The funded percentages under ERISA and FAS vary due to inherent differences in the assumptions and methodologies used to calculate the respective obligations.
As of December 31, 2024 and 2023, these plans were sufficiently funded on an ERISA basis so as not to be subject to benefit payment restrictions. The funded percentages under ERISA and FAS vary due to inherent differences in the assumptions and methodologies used to calculate the respective obligations.
We cannot predict the outcome of the fiscal year 2024 budget process or whether additional short-term funding will be required in the event annual appropriations measures are not finalized by the expiration date of the current CR.
We cannot predict the outcome of the fiscal year 2025 budget process or whether additional short-term funding will be required in the event annual appropriations measures are not finalized by the expiration date of the current CR.
The expected FAS/CAS Adjustment is subject to change during 2024, when we remeasure our actuarial estimate of the unfunded benefit obligation with updated census data and other items later in the year.
The expected FAS/CAS Adjustment is subject to change during 2025, when we remeasure our actuarial estimate of the unfunded benefit obligation with updated census data and other items later in the year.
Ford (CVN 78), the first ship of the Ford class, was delivered to the U.S. Navy in the second quarter of 2017. In June 2015, we were awarded a contract for the detail design and construction of John F. Kennedy (CVN 79), following several years of engineering, advance construction, and purchase of long-lead-time components and material.
USS Gerald R. Ford (CVN 78), the first ship of the Ford class, was delivered to the U.S. Navy in the second quarter of 2017. In June 2015, we were awarded a contract for the detail design and construction of John F. Kennedy (CVN 79), following several years of engineering, advance construction, and purchase of long-lead-time components and material.
We expect our 2024 cash contributions to our qualified defined benefit pension plans to be less than $1 million, all of which we anticipate will be discretionary and which are exclusive of CAS cost recoveries under our contracts. Due to the differences in calculation methodologies, our FAS expense is not necessarily representative of our funding requirements or CAS cost recoveries.
We expect our 2025 cash contributions to our qualified defined benefit pension plans to be less than $1 million, all of which we anticipate will be discretionary and which are exclusive of CAS cost recoveries in our contracts. Due to the differences in calculation methodologies, our FAS expense is not necessarily representative of our funding requirements or CAS cost recoveries.
Cost-type contracts generally require that the contractor use its reasonable efforts to accomplish the scope of the work within some specified time and some stated dollar limitation. • Time and Materials - Time and materials contracts specify a fixed hourly billing rate for each direct labor hour expended and reimbursement for allowable material costs and expenses.
Cost-type contracts generally require that the contractor use its reasonable efforts to accomplish the scope of the work within some specified time and some stated dollar limitation. 35 Table of Contents • Time and Materials - Time and materials contracts specify a fixed hourly billing rate for each direct labor hour expended and reimbursement for allowable material costs and expenses.
As a result, while both CAS and FAS use assumptions in their calculation methodologies, each method results in different calculated amounts of retirement related benefit plan costs. We recover our CAS costs through the pricing of products and services on U.S.
As a result, while both CAS and FAS use 36 Table of Contents assumptions in their calculation methodologies, each method results in different calculated amounts of retirement related benefit plan costs. We recover our CAS costs through the pricing of products and services on U.S.
We vary our leverage both to optimize our equity return and to pursue acquisitions. We expect to meet our current debt obligations as they come due through internally generated funds from current levels of operations and/or through refinancing in the debt markets prior to the maturity dates of our debt.
We vary our leverage both to optimize our equity return and to pursue acquisitions. We expect to meet our current debt obligations as they come due through internally generated funds from current levels of operations, existing borrowing facilities, and/or through refinancing in the debt markets prior to the maturity dates of our debt.
Unusual fluctuations in operating performance driven by changes in a specific cost element across multiple contracts are described in our analysis. Refer to "Segment Operating Results" and "Product and Service Analysis" in this section for details related to cost of sales for both product sales and service revenues.
Unusual fluctuations in operating performance driven by changes in a specific cost element across multiple contracts are described in our analysis. 40 Table of Contents Refer to "Segment Operating Results" and "Product and Service Revenues and Cost Analysis" in this section for details related to cost of sales for both product sales and service revenues.
While monthly inflation rates have steadily declined since peaking at 32 9.1% in June of 2022, rising military personnel and operations and maintenance costs continue to pressure the Pentagon’s investment portfolio buying power. If above-average inflationary conditions continue over the long-term, additional resources may be required to address contract and labor cost growth.
While monthly inflation rates have declined since peaking at 9.1% in June of 2022, rising military personnel and operations and maintenance costs continue to pressure the Pentagon’s investment portfolio buying power. If above- 33 Table of Contents average inflationary conditions continue over the long-term, additional resources may be required to address contract and labor cost growth.
In 2023, we received an award modification for long-lead-time material and advance construction for the next five boats. USS Gerald R. Ford class (CVN 78) aircraft carriers Design and construction for the Ford class program, which is the aircraft carrier replacement program for the decommissioned Enterprise (CVN 65) and Nimitz class (CVN 68) aircraft carriers. USS Gerald R.
In 2023, we received an award modification for long-lead-time material and advance construction for the next five boats. 53 Table of Contents USS Gerald R. Ford class (CVN 78) aircraft carriers Design and construction for the Ford class program, which is the aircraft carrier replacement program for the decommissioned Enterprise (CVN 65) and Nimitz class (CVN 68) aircraft carriers.
Government contracts. 33 Our contracts typically fall into one of four categories: firm fixed-price, fixed-price incentive, cost-type, and time and materials.
Our contracts typically fall into one of four categories: firm fixed-price, fixed-price incentive, cost-type, and time and materials.
We currently do not expect the Framework to have a material impact on our effective tax rate or our consolidated results of operation, financial position, and cash flows. BACKLOG Total backlog as of December 31, 2023, was approximately $48.1 billion.
We currently do not expect the Framework to have a material impact on our effective tax rate or our consolidated results of operation, financial position, and cash flows. BACKLOG Total backlog as of December 31, 2024, was approximately $48.7 billion.
Cash Flows We discuss below our significant operating, investing, and financing activities affecting cash flows for each of the three years in the period ended December 31, 2023, as classified in our consolidated statements of cash flows. Operating Activities Cash provided by operating activities in 2023 was $970 million, compared to $766 million provided by operating activities in 2022.
Cash Flows We discuss below our significant operating, investing, and financing activities affecting cash flows for each of the three years in the period ended December 31, 2024, as classified in our consolidated statements of cash flows. Operating Activities Cash provided by operating activities in 2024 was $393 million, compared to $970 million provided by operating activities in 2023.
We expect 2024 contributions to our other postretirement benefit plans to be approximately $35 million, which are exclusive of CAS cost recoveries under our contracts. Contributions for other postretirement benefit plans are not required to be funded in advance and are paid on an as-incurred basis.
We expect 2025 contributions to our other postretirement benefit plans to be approximately $34 million, which are exclusive of CAS cost recoveries under our contracts. Contributions for other postretirement benefit plans are not required to be funded in advance and are paid on an as-incurred basis.
Unless plan assets and benefit obligations are subject to re-measurement during the year, the expected return on pension assets is based on the fair value of plan assets at the beginning of the year.
Unless plan assets and benefit obligations are subject to re- 37 Table of Contents measurement during the year, the expected return on pension assets is based on the fair value of plan assets at the beginning of the year.
Net pre-tax unrecognized prior service costs (credits) as of December 31, 2023 and 2022 were $125 million and $140 million, respectively. These net deferred costs (credits) primarily originated from plan amendments, including those resulting from collective bargaining agreements.
Net pre-tax unrecognized prior service costs (credits) as of December 31, 2024 and 2023 were $111 million and $125 million, respectively. These net deferred costs (credits) primarily originated from plan amendments, including those resulting from collective bargaining agreements.
Other Sources and Uses of Capital Stockholder Distributions - In November 2023, our board of directors authorized an increase in our quarterly cash dividend to $1.30 per share. The board previously increased the quarterly cash dividend to $1.24 per share in November 2022 and $1.18 per share in November 2021.
Other Sources and Uses of Capital Stockholder Distributions - In November 2024, our board of directors authorized an increase in our quarterly cash dividend to $1.35 per share. The board previously increased the quarterly cash dividend to $1.30 per share in November 2023 and $1.24 per share in November 2022.
An increase or decrease of 25 basis points in the discount rate and the expected long-term rate of return assumptions would have had the following approximate impacts on pension expense and obligations: ($ in millions) Increase (Decrease) in 2024 Expense Increase (Decrease) in December 31, 2023 Obligations 25 basis point decrease in discount rate $ 7 $ 193 25 basis point increase in discount rate (6) (184) 25 basis point decrease in expected return on assets 17 25 basis point increase in expected return on assets (17) Assuming an 8.00% expected return on assets assumption, a $50 million pension plan contribution is generally expected to favorably impact the current year expected return on assets by approximately $2 million, depending on the timing of the contribution.
An increase or decrease of 25 basis points in the discount rate and the expected long-term rate of return assumptions would have had the following approximate impacts on pension expense and obligations: ($ in millions) Increase (Decrease) in 2025 Expense Increase (Decrease) in December 31, 2024 Obligations 25 basis point decrease in discount rate $ 3 $ 163 25 basis point increase in discount rate — (156) 25 basis point decrease in expected return on assets 17 25 basis point increase in expected return on assets (17) Assuming an 8.00% expected return on assets assumption, a $50 million pension plan contribution is generally expected to favorably impact the current year expected return on assets by approximately $2 million, depending on the timing of the contribution.
Investments in fixed-income securities are generally valued based on market transactions for comparable securities and various relationships between securities that are generally recognized by institutional traders.
Investments in fixed-income 38 Table of Contents securities are generally valued based on market transactions for comparable securities and various relationships between securities that are generally recognized by institutional traders.
See Note 17: Employee Pension and Other Postretirement Benefits in Item 8.
See Note 16: Employee Pension and Other Postretirement Benefits in Item 8.
Consequently, the discount rate can be volatile from year to year. The discount rate assumption is determined for each plan by constructing a hypothetical portfolio of high-quality bonds with cash flows that match the estimated outflows for future benefit payments to determine a single equivalent discount rate.
The discount rate assumption is determined for each plan by constructing a hypothetical portfolio of high-quality bonds with cash flows that match the estimated outflows for future benefit payments to determine a single equivalent discount rate.
San Antonio class (LPD 17) amphibious transport dock ships Design and build amphibious transport dock ships, which are warships that embark, transport, and land elements of a landing force for a variety of expeditionary warfare missions, and also serve as the secondary aviation platform for Amphibious Readiness Groups.
Services include maintenance services on nuclear reactor prototypes. San Antonio class (LPD 17) amphibious transport dock ships Design and build amphibious transport dock ships, which are warships that embark, transport, and land elements of a landing force for a variety of expeditionary warfare missions, and also serve as the secondary aviation platform for Amphibious Readiness Groups.
Where such items have occurred and the effects are material, a separate description is provided. 41 Net Cumulative Catch-up Revenue Adjustments For the years ended December 31, 2023, 2022, and 2021, favorable and unfavorable cumulative catch-up revenue adjustments were as follows: Year Ended December 31 ($ in millions) 2023 2022 2021 Gross favorable adjustments $ 309 $ 325 $ 244 Gross unfavorable adjustments (191) (212) (129) Net adjustments $ 118 $ 113 $ 115 For the years ended December 31, 2023, 2022, and 2021, net cumulative catch-up revenue adjustments by segment were as follows: Year Ended December 31 ($ in millions) 2023 2022 2021 Ingalls $ 91 $ 109 $ 103 Newport News 9 (13) 6 Mission Technologies 18 17 6 Net adjustments $ 118 $ 113 $ 115 Ingalls Year Ended December 31 2023 over 2022 2022 over 2021 ($ in millions) 2023 2022 2021 Dollars Percent Dollars Percent Sales and service revenues $ 2,752 $ 2,570 $ 2,528 $ 182 7 % $ 42 2 % Segment operating income 362 292 281 70 24 % 11 4 % As a percentage of segment sales 13.2 % 11.4 % 11.1 % Sales and Service Revenues Ingalls sales and service revenues, including intersegment sales, increased $182 million, or 7%, in 2023 compared to 2022, primarily driven by higher volumes in surface combatants and amphibious assault ships, partially offset by lower volumes in the NSC program.
Where such items have occurred and the effects are material, a separate description is provided. 43 Table of Contents Net Cumulative Catch-up Revenue Adjustments For the years ended December 31, 2024, 2023, and 2022, gross favorable and unfavorable cumulative catch-up revenue adjustments were as follows: Year Ended December 31 ($ in millions) 2024 2023 2022 Gross favorable adjustments $ 287 $ 309 $ 325 Gross unfavorable adjustments (413) (191) (212) Net adjustments $ (126) $ 118 $ 113 For the years ended December 31, 2024, 2023, and 2022, net cumulative catch-up revenue adjustments by segment were as follows: Year Ended December 31 ($ in millions) 2024 2023 2022 Ingalls $ 14 $ 91 $ 109 Newport News (154) 9 (13) Mission Technologies 14 18 17 Net adjustments $ (126) $ 118 $ 113 Ingalls Year Ended December 31 2024 over 2023 2023 over 2022 ($ in millions) 2024 2023 2022 Dollars Percent Dollars Percent Sales and service revenues $ 2,767 $ 2,752 $ 2,570 $ 15 1 % $ 182 7 % Segment operating income 211 362 292 (151) (42) % 70 24 % As a percentage of segment sales 7.6 % 13.2 % 11.4 % Sales and Service Revenues Ingalls sales and service revenues, including intersegment sales, increased $15 million, or 1%, in 2024 compared to 2023, primarily driven by higher volumes in surface combatants, partially offset by lower volumes in amphibious assault ships and the NSC program.
Segment Operating Income Mission Technologies segment operating income for the year ended December 31, 2023, was $101 million, compared to segment operating income of $63 million in 2022.
Segment Operating Income Mission Technologies segment operating income for the year ended December 31, 2024, was $116 million, compared to segment operating income of $101 million in 2023.
Although a new fiscal year began on October 1, 2023, annual appropriations to fund the federal government for fiscal year 2024 have not been enacted. To provide Congress additional time to reach agreements on funding levels for federal agencies, a Continuing Resolution ("CR") extending funding through November 17, 2023, at fiscal year 2023 levels was enacted on September 30, 2023.
Although a new fiscal year began on October 1, 2024, annual appropriations to fund the federal government for fiscal year 2025 have not been enacted. To provide Congress additional time to reach agreements on funding levels for federal agencies, a continuing resolution was enacted extending funding through December 20, 2024, at fiscal year 2024 levels.
We paid cash dividends totaling $200 million ($5.02 per share), $192 million ($4.78 per share), and $186 million ($4.60 per share) in the years ended December 31, 2023, 2022, and 2021, respectively.
We paid cash dividends totaling $206 million ($5.25 per share), $200 million ($5.02 per share), and $192 million ($4.78 per share) in the years ended December 31, 2024, 2023, and 2022, respectively.
Mission Technologies Year Ended December 31 2023 over 2022 2022 over 2021 ($ in millions) 2023 2022 2021 Dollars Percent Dollars Percent Sales and service revenues $ 2,699 $ 2,387 $ 1,476 $ 312 13 % $ 911 62 % Segment operating income 101 63 50 38 60 % 13 26 % As a percentage of segment sales 3.7 % 2.6 % 3.4 % Sales and Service Revenues Mission Technologies sales and service revenues, including intersegment sales, for the year ended December 31, 2023, increased $312 million, or 13%, compared to 2022, primarily due to higher volumes in C5ISR and CEW&S contracts.
Mission Technologies Year Ended December 31 2024 over 2023 2023 over 2022 ($ in millions) 2024 2023 2022 Dollars Percent Dollars Percent Sales and service revenues $ 2,937 $ 2,699 $ 2,387 $ 238 9 % $ 312 13 % Segment operating income 116 101 63 15 15 % 38 60 % As a percentage of segment sales 3.9 % 3.7 % 2.6 % Sales and Service Revenues Mission Technologies sales and service revenues, including intersegment sales, for the year ended December 31, 2024, increased $238 million, or 9%, compared to 2023, primarily due to higher volumes in CEW&S and C5ISR contracts.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following discussion should be read along with the audited consolidated financial statements included in Item 8 of this Annual Report on Form 10-K, as well as Part II, “Item 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The following discussion should be read along with the audited consolidated financial statements included in Item 8 of this Annual Report on Form 10-K along with the other sections of this Form 10-K, including Item 1A.
Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer). Backlog excludes unexercised contract options and unfunded Indefinite Delivery/Indefinite Quantity orders. For contracts having no stated contract values, backlog includes only the amounts committed by the customer.
Total backlog includes both funded backlog (firm orders for which funding is contractually obligated by the customer) and unfunded backlog (firm orders for which funding is not currently contractually obligated by the customer). Backlog excludes unexercised contract options and unfunded indefinite delivery/indefinite quantity orders.
Accounting Standards Updates See Note 3: Accounting Standards Updates in Item 8 for further information. 37 CONSOLIDATED OPERATING RESULTS The following table presents selected financial highlights: Year Ended December 31 2023 over 2022 2022 over 2021 ($ in millions) 2023 2022 2021 Dollars Percent Dollars Percent Sales and service revenues $ 11,454 $ 10,676 $ 9,524 $ 778 7 % $ 1,152 12 % Cost of product sales and service revenues 9,808 9,236 8,156 572 6 % 1,080 13 % Income from operating investments, net 37 48 41 (11) (23) % 7 17 % Other income and gains, net 120 1 2 119 11,900 % (1) (50) % General and administrative expenses 1,022 924 898 98 11 % 26 3 % Operating income 781 565 513 216 38 % 52 10 % Interest expense (95) (102) (89) 7 7 % (13) (15) % Non-operating retirement benefit 148 276 181 (128) (46) % 95 52 % Other, net 19 (20) 17 39 195 % (37) (218) % Federal and foreign income taxes 172 140 78 32 23 % 62 79 % Net earnings $ 681 $ 579 $ 544 $ 102 18 % $ 35 6 % Operating Performance Assessment and Reporting We manage and assess the performance of our business based on our performance on individual contracts and programs using the financial measures referred to below, with consideration given to the Critical Accounting Policies, Estimates, and Judgments referred to in this section.
Accounting Standards Updates See Note 3: Accounting Standards Updates in Item 8 for further information. 39 Table of Contents CONSOLIDATED OPERATING RESULTS The following table presents selected financial highlights: Year Ended December 31 2024 over 2023 2023 over 2022 ($ in millions) 2024 2023 2022 Dollars Percent Dollars Percent Sales and service revenues $ 11,535 $ 11,454 $ 10,676 $ 81 1 % $ 778 7 % Cost of product sales and service revenues 10,085 9,808 9,236 277 3 % 572 6 % Income from operating investments, net 49 37 48 12 32 % (11) (23) % Other income and gains, net 9 120 1 (111) (93) % 119 11,900 % General and administrative expenses 973 1,022 924 (49) (5) % 98 11 % Operating income 535 781 565 (246) (31) % 216 38 % Interest expense (95) (95) (102) — — % 7 7 % Non-operating retirement benefit 179 148 276 31 21 % (128) (46) % Other, net 24 19 (20) 5 26 % 39 195 % Federal and foreign income taxes 93 172 140 (79) (46) % 32 23 % Net earnings $ 550 $ 681 $ 579 $ (131) (19) % $ 102 18 % Operating Performance Assessment and Reporting We manage and assess the performance of our business based on our performance on individual contracts and programs using the financial measures referred to below, with consideration given to the Critical Accounting Policies, Estimates, and Judgments referred to in this section.
The differences in asset returns resulted in an actuarial gain of $263 million, and the differences in discount rates resulted in an actuarial loss of $144 million for the year ended December 31, 2023.
The differences in asset returns resulted in an actuarial loss of $24 million, and the differences in discount rates resulted in an actuarial gain of $500 million for the year ended December 31, 2024.
A plan’s CAS pension cost can only be allocated until the plan is fully funded as defined under the CAS requirements. 36 Other FAS and CAS Pension Considerations - A key driver of the difference between FAS expense and CAS cost (and consequently the FAS/CAS Adjustment) is the pattern of earnings and expense recognition for actuarial gains and losses that arise when our asset and liability experiences differ from our assumptions under each set of requirements.
Other FAS and CAS Pension Considerations - A key driver of the difference between FAS expense and CAS cost (and consequently the FAS/CAS Adjustment) is the pattern of earnings and expense recognition for actuarial gains and losses that arise when our asset and liability experiences differ from our assumptions under each set of requirements.
Current period state income tax expense is charged to contract costs and included in cost of sales and service revenues in segment operating income. Non-current state income tax benefit in 2023 was $11 million, compared to non-current state income tax expense of $2 million in 2022.
Current period state income taxes are charged to contract costs and included in cost of sales and service revenues in segment operating income. Non-current state income tax benefit in 2024 was $24 million, compared to non-current state income tax benefit of $11 million in 2023.
Global supply chain and labor markets continue to experience high levels of disruption, causing significant materials and parts shortages, including raw material, microelectronics and commodity shortages, as well as delivery delays, labor shortages, and price increases.
Global supply chain and labor markets continue to experience high levels of disruption, causing significant materials and parts shortages, including raw material, microelectronics and commodity shortages, as well as delivery delays, labor shortages, and price increases. The labor market continues to present significant challenges for our Company, our industry, and the supply chain.
As of December 31, 2023, future scheduled periodic interest payments on our outstanding long-term debt, including commitment fees that we are obligated to pay on our existing $1.5 billion Revolving Credit Facility, were approximately $333 million, with approximately $87 million expected to be paid in 2024 and $246 million thereafter.
As of December 31, 2024, future scheduled periodic interest payments on our outstanding long-term debt, including commitment fees that we are obligated to pay on our existing $1.7 billion Second Amended and Restated Revolving Credit Facility, were approximately $687 million, with approximately $105 million expected to be paid in 2025 and $582 million thereafter.
The America class (LHA 6) ships, together with the Wasp class (LHD 1) ships, are the successors to the decommissioned Tarawa class (LHA 1) ships. The America class (LHA 6) ships optimize aviation operations and support capabilities. We are currently constructing Bougainville (LHA 8) and Fallujah (LHA 9).
The America class (LHA 6) ships, together with the Wasp class (LHD 1) ships, are the successors to the decommissioned Tarawa class (LHA 1) ships. The America class (LHA 6) ships optimize aviation operations and support capabilities.
As disclosed in Note 17: Employee Pension and Other Postretirement Benefits in Item 8, net pre-tax unrecognized actuarial losses as of December 31, 2023 and 2022 were $455 million and $678 million, respectively.
As disclosed in Note 16: Employee Pension and Other Postretirement Benefits in Item 8, net pre-tax unrecognized actuarial gains as of December 31, 2024 were $59 million and unrecognized actuarial losses as of December 31, 2023 were $455 million.
Other Income and Gains, Net Other income and gains, net in 2023 was $120 million, compared to $1 million in 2022.
Other Income and Gains, Net Other income and gains, net in 2024 was $9 million, compared to $120 million in 2023.
See Note 13: Debt, Note 15: Leases, Note 17: Employee Pension and Other Postretirement Benefits, Note 12: Income Taxes, and Note 2: Summary of Significant Accounting Policies in Item 8 for information about those obligations.
See Note 12: Debt, Note 14: Leases, 51 Table of Contents Note 16: Employee Pension and Other Postretirement Benefits, Note 11: Income Taxes, and Note 2: Summary of Significant Accounting Policies in Item 8 for information about those obligations.
Segment operating income may also be affected by, among other things, contract performance, the effects of workforce stoppages, the effects of natural disasters such as hurricanes, resolution of disputed items with the customer, recovery of insurance proceeds, and other discrete events.
Segment operating income may also be affected by, among other things, contract performance, inflationary pressures on our supply chain, the effects of workforce stoppages and other labor-related shortfalls, the availability of raw materials, the effects of natural disasters such as hurricanes, resolution of disputed items with the customer, recovery of insurance proceeds, and other discrete events.
Investing Activities Cash used in investing activities in 2023 was $236 million, compared to $268 million used in investing activities in 2022.
Investing Activities Cash used in investing activities in 2024 was $348 million, compared to $236 million used in investing activities in 2023.
In 2023, the actual return on assets was approximately 12.3%, which was greater than the expected return assumption of 8.00%. For the year ended December 31, 2023, the weighted average discount rates for our pension and other postretirement benefit plans decreased by 19 and 15 basis points, respectively.
In 2024, the actual return on assets was approximately 7.7%, which was less than the expected return assumption of 8.00%. For the year ended December 31, 2024, the weighted average discount rates for our pension and other postretirement benefit plans increased by 70 and 44 basis points, respectively.
Neal (DDG 131), Sam Nunn (DDG 133), Thad Cochran (DDG 135), John F. Lehman (DDG 137), Telesforo Trinidad (DDG 139), Ernest E. Evans (DDG 141), and Charles J. French (DDG 142). Columbia class (SSBN 826) submarines Design and construct modules for Columbia class (SSBN 826) nuclear ballistic missile submarines ("SSBNs") as a subcontractor to Electric Boat.
Lehman (DDG 137), Telesforo Trinidad (DDG 139), Ernest E. Evans (DDG 141), Charles J. French (DDG 142), and Richard J. Danzig (DDG 143). Columbia class (SSBN 826) submarines Design and construct modules for Columbia class (SSBN 826) nuclear ballistic missile submarines ("SSBNs") as a subcontractor to Electric Boat.
Coast Guard's National Security Cutters ("NSCs"), the largest and most technically advanced class of cutter in the U.S. Coast Guard. The NSC is equipped to carry out maritime homeland security, maritime safety, protection of natural resources, maritime mobility, and national defense missions.
Coast Guard's National Security Cutters ("NSCs"), the largest and most technically advanced class of cutter in the U.S. Coast Guard. The NSC is equipped to carry out maritime homeland security, maritime safety, protection of natural resources, maritime mobility, and national defense missions. There were 11 ships planned for this program, of which the first ten ships have been delivered.
The change in cash used in investing activities was primarily driven by the sale of an unconsolidated ship 47 repair and specialty fabrication joint venture in 2023, partially offset by increased investment in one of our unconsolidated nuclear and environmental joint ventures in 2023.
The change in investing cash was primarily driven by an increase in capital expenditures and the sale of our 49 Table of Contents interest in an unconsolidated ship repair and specialty fabrication joint venture in 2023, partially offset by additional investment in one of our unconsolidated nuclear and environmental joint ventures in 2023.
Newport News Year Ended December 31 2023 over 2022 2022 over 2021 ($ in millions) 2023 2022 2021 Dollars Percent Dollars Percent Sales and service revenues $ 6,133 $ 5,852 $ 5,663 $ 281 5 % $ 189 3 % Segment operating income 379 357 352 22 6 % 5 1 % As a percentage of segment sales 6.2 % 6.1 % 6.2 % Sales and Service Revenues Newport News sales and service revenues, including intersegment sales, increased $281 million, or 5%, in 2023 compared to 2022, primarily driven by higher volumes in aircraft carrier construction and engineering, the Columbia 42 class (SSBN 826) submarine program, submarine services, and the Virginia class (SSN 774) submarine program, partially offset by lower volumes in aircraft carrier RCOH and naval nuclear support services.
Newport News Year Ended December 31 2024 over 2023 2023 over 2022 ($ in millions) 2024 2023 2022 Dollars Percent Dollars Percent Sales and service revenues $ 5,969 $ 6,133 $ 5,852 $ (164) (3) % $ 281 5 % Segment operating income 246 379 357 (133) (35) % 22 6 % As a percentage of segment sales 4.1 % 6.2 % 6.1 % Sales and Service Revenues Newport News sales and service revenues, including intersegment sales, decreased $164 million, or 3%, in 2024 compared to 2023, primarily driven by cumulative catch-up adjustments on the Virginia class (SSN 774) submarine program, and lower volumes on aircraft carriers and naval nuclear support services, partially offset by higher volumes in the Columbia class (SSBN 826) program. 44 Table of Contents Segment Operating Income Newport News segment operating income in 2024 was $246 million, compared to segment operating income of $379 million in 2023.
These factors and our resulting contributions also impact the funded status of the plans. 48 We made the following minimum and discretionary contributions to our pension and other postretirement benefit plans in the years ended December 31, 2023, 2022, and 2021: Year Ended December 31 ($ in millions) 2023 2022 2021 Pension plans Discretionary Qualified $ — $ — $ 60 Non-qualified 12 10 9 Other benefit plans 32 31 37 Total contributions $ 44 $ 41 $ 106 As of December 31, 2023 and 2022, our qualified pension plans were funded 114% and 109%, respectively.
These factors and our resulting contributions also impact the funded status of the plans. 50 Table of Contents We made the following minimum and discretionary contributions to our pension and other postretirement benefit plans in the years ended December 31, 2024, 2023, and 2022: Year Ended December 31 ($ in millions) 2024 2023 2022 Pension plans Discretionary Qualified $ — $ — $ — Non-qualified 11 12 10 Other benefit plans 36 32 31 Total contributions $ 47 $ 44 $ 41 As of December 31, 2024 and 2023, our qualified pension plans were funded 125% and 114%, respectively on a FAS basis.
We expect the Operating FAS/CAS Adjustment in 2024 to be a net expense of approximately $63 million ($113 million FAS and $50 million CAS), primarily driven by lower interest rates under FAS.
We expect the Operating FAS/CAS Adjustment in 2025 to be a net expense of approximately $43 million ($91 million FAS and $48 million CAS), primarily driven by higher interest rates under FAS.
Our purchase obligations as of December 31, 2023, were approximately $5,122 million, with approximately $2,702 million expected to be paid in 49 2024 and $2,420 million thereafter.
Our purchase obligations as of December 31, 2024, were approximately $5,794 million, with approximately $2,708 million expected to be paid in 2025 and $3,086 million thereafter.
For the year ended December 31, 2023, we repurchased 337,007 shares at an aggregate cost of $75 million. For the years ended December 31, 2022 and 2021, we repurchased 244,561 and 544,440 shares, respectively, at aggregate costs of $52 million and $101 million, respectively.
For the year ended December 31, 2024, we repurchased 607,841 shares at an aggregate cost of $163 million, including $1 million of accrued excise tax. For the years ended December 31, 2023 and 2022, we repurchased 337,007 and 244,561 shares, respectively, at aggregate costs of $75 million and $52 million, respectively.
We delivered USS Frank E. Petersen Jr. (DDG 121), Lenah H. Sutcliffe Higbee (DDG 123), and Jack H. Lucas (DDG 125) in 2021, 2022, and 2023, respectively. We have contracts to construct the following Arleigh Burke class (DDG 51) destroyers: Ted Stevens (DDG 128), Jeremiah Denton (DDG 129), George M.
Sutcliffe Higbee (DDG 123), and USS Jack H. Lucas (DDG 125) in 2021, 2022, and 2023, respectively. We have contracts to construct the following Arleigh Burke class (DDG 51) destroyers: Ted Stevens (DDG 128), Jeremiah Denton (DDG 129), George M. Neal (DDG 131), Sam Nunn (DDG 133), Thad Cochran (DDG 135), John F.
The following table presents segment operating results: Year Ended December 31 2023 over 2022 2022 over 2021 ($ in millions) 2023 2022 2021 Dollars Percent Dollars Percent Sales and Service Revenues Ingalls $ 2,752 $ 2,570 $ 2,528 $ 182 7 % $ 42 2 % Newport News 6,133 5,852 5,663 281 5 % 189 3 % Mission Technologies 2,699 2,387 1,476 312 13 % 911 62 % Intersegment eliminations (130) (133) (143) 3 2 % 10 7 % Sales and service revenues $ 11,454 $ 10,676 $ 9,524 $ 778 7 % $ 1,152 12 % Operating Income Ingalls $ 362 $ 292 $ 281 $ 70 24 % $ 11 4 % Newport News 379 357 352 22 6 % 5 1 % Mission Technologies 101 63 50 38 60 % 13 26 % Segment operating income 842 712 683 130 18 % 29 4 % Non-segment factors affecting operating income Operating FAS/CAS Adjustment (72) (145) (157) 73 50 % 12 8 % Non-current state income taxes 11 (2) (13) 13 650 % 11 85 % Operating income $ 781 $ 565 $ 513 $ 216 38 % $ 52 10 % KEY SEGMENT FINANCIAL MEASURES Sales and Service Revenues Period-to-period revenues reflect performance under new and ongoing contracts.
We are aligned into three reportable segments: Ingalls, Newport News, and Mission Technologies. 42 Table of Contents The following table presents segment operating results: Year Ended December 31 2024 over 2023 2023 over 2022 ($ in millions) 2024 2023 2022 Dollars Percent Dollars Percent Sales and Service Revenues Ingalls $ 2,767 $ 2,752 $ 2,570 $ 15 1 % $ 182 7 % Newport News 5,969 6,133 5,852 (164) (3) % 281 5 % Mission Technologies 2,937 2,699 2,387 238 9 % 312 13 % Intersegment eliminations (138) (130) (133) (8) (6) % 3 2 % Sales and service revenues $ 11,535 $ 11,454 $ 10,676 $ 81 1 % $ 778 7 % Operating Income Ingalls $ 211 $ 362 $ 292 $ (151) (42) % $ 70 24 % Newport News 246 379 357 (133) (35) % 22 6 % Mission Technologies 116 101 63 15 15 % 38 60 % Segment operating income 573 842 712 (269) (32) % 130 18 % Non-segment factors affecting operating income Operating FAS/CAS Adjustment (62) (72) (145) 10 14 % 73 50 % Non-current state income taxes 24 11 (2) 13 118 % 13 650 % Operating income $ 535 $ 781 $ 565 $ (246) (31) % $ 216 38 % KEY SEGMENT FINANCIAL MEASURES Sales and Service Revenues Period-to-period revenues reflect performance under new and ongoing contracts.
Geopolitical relationships continue to change, and the U.S. and its allies face a global security environment that includes threats from state and non-state actors, including major global powers, as well as terrorist organizations, emerging nuclear tensions, diverse regional security concerns, and political instability. In February 2022, Russian forces invaded Ukraine, and the conflict is continuing.
The U.S. and its allies face a global security environment that is impacted by threats from state and non-state actors, including major global powers, as well as terrorist organizations, emerging nuclear tensions, diverse regional security concerns, and political instability.
The components of the Operating FAS/CAS Adjustment were as follows: Year Ended December 31 2023 over 2022 2022 over 2021 ($ in millions) 2023 2022 2021 Dollars Percent Dollars Percent FAS benefit (expense) $ 30 $ 86 $ (28) $ (56) (65) % $ 114 407 % CAS cost 46 45 52 1 2 % (7) (13) % FAS/CAS Adjustment 76 131 24 (55) (42) % 107 446 % Non-operating retirement benefit (148) (276) (181) 128 46 % (95) (52) % Operating FAS/CAS Adjustment (expense) benefit $ (72) $ (145) $ (157) $ 73 50 % $ 12 8 % The Operating FAS/CAS Adjustment in 2023 was a net expense of $72 million, compared to a net expense of $145 million in 2022.
The components of the Operating FAS/CAS Adjustment were as follows: Year Ended December 31 2024 over 2023 2023 over 2022 ($ in millions) 2024 2023 2022 Dollars Percent Dollars Percent FAS benefit (expense) $ 64 $ 30 $ 86 $ 34 113 % $ (56) (65) % CAS cost 53 46 45 7 15 % 1 2 % FAS/CAS Adjustment 117 76 131 41 54 % (55) (42) % Non-operating retirement benefit (179) (148) (276) (31) (21) % 128 46 % Operating FAS/CAS Adjustment (expense) benefit $ (62) $ (72) $ (145) $ 10 14 % $ 73 50 % The Operating FAS/CAS Adjustment in 2024 was a net expense of $62 million, compared to a net expense of $72 million in 2023.
In 2023, we were awarded a long-lead-time material contract for LHA 10 (unnamed). Arleigh Burke class (DDG 51) destroyers Build guided missile destroyers designed for conducting anti-air, anti-submarine, anti-surface, and strike operations. The Aegis-equipped Arleigh Burke class (DDG 51) destroyers are the U.S. Navy's primary surface combatant, and have been constructed in variants, allowing technological advances during construction.
Arleigh Burke class (DDG 51) destroyers Build guided missile destroyers designed for conducting anti-air, anti-submarine, anti-surface, and strike operations. The Aegis-equipped Arleigh Burke class (DDG 51) destroyers are the U.S. Navy's primary surface combatant, and have been constructed in variants, allowing technological advances during construction. We delivered USS Frank E. Petersen Jr. (DDG 121), USS Lenah H.
Refer to "Segment Operating Results" in this section for details related to segment operating income, as well as activity within each segment. 39 The following table reconciles operating income to segment operating income: Year Ended December 31 2023 over 2022 2022 over 2021 ($ in millions) 2023 2022 2021 Dollars Percent Dollars Percent Operating income $ 781 $ 565 $ 513 $ 216 38 % $ 52 10 % Operating FAS/CAS Adjustment 72 145 157 (73) (50) % (12) (8) % Non-current state income taxes (11) 2 13 (13) (650) % (11) (85) % Segment operating income $ 842 $ 712 $ 683 $ 130 18 % $ 29 4 % FAS/CAS Adjustment and Operating FAS/CAS Adjustment The FAS/CAS Adjustment reflects the difference between expenses for pension and other postretirement benefits determined in accordance with GAAP and the expenses for these items included in segment operating income in accordance with CAS.
The following table reconciles operating income to segment operating income: Year Ended December 31 2024 over 2023 2023 over 2022 ($ in millions) 2024 2023 2022 Dollars Percent Dollars Percent Operating income $ 535 $ 781 $ 565 $ (246) (31) % $ 216 38 % Operating FAS/CAS Adjustment 62 72 145 (10) (14) % (73) (50) % Non-current state income taxes (24) (11) 2 (13) (118) % (13) (650) % Segment operating income $ 573 $ 842 $ 712 $ (269) (32) % $ 130 18 % 41 Table of Contents FAS/CAS Adjustment and Operating FAS/CAS Adjustment The FAS/CAS Adjustment reflects the difference between expenses for pension and other postretirement benefits determined in accordance with GAAP and the expenses for these items included in segment operating income in accordance with CAS.
In estimating contract costs, we utilize a profit-booking rate based upon performance expectations that incorporate a number of assumptions and estimates regarding risks related to technical requirements, feasibility, schedule, and contract costs.
In estimating contract costs, we utilize a profit-booking rate based upon performance expectations that incorporate a number of assumptions and estimates regarding risks related to technical requirements, feasibility, schedule, and contract costs. Management performs periodic reviews of the contracts to evaluate the underlying risks, which may increase the profit-booking rate as we are able to mitigate and retire such risks.
SEGMENT OPERATING RESULTS Basis of Presentation Our discussion of business segment performance focuses on sales and service revenues and operating income, 40 consistent with our approach for managing our business. We are aligned into three reportable segments: Ingalls, Newport News, and Mission Technologies.
SEGMENT OPERATING RESULTS Basis of Presentation Our discussion of business segment performance focuses on sales and service revenues and operating income, consistent with our approach for managing our business.
In 2023, we received an award modification for the detail design and construction of Philadelphia (LPD 32). We are currently constructing Richard M. McCool Jr. (LPD 29), Harrisburg (LPD 30), and Pittsburgh (LPD 31). Virginia class (SSN 774) fast attack submarines Construct attack submarines as the principal subcontractor to Electric Boat.
We are currently constructing Harrisburg (LPD 30), Pittsburgh (LPD 31), and Philadelphia (LPD 32). Virginia class (SSN 774) fast attack submarines Construct attack submarines as the principal subcontractor to Electric Boat.
The non-operating retirement benefit in 2023 was $148 million, compared to $276 million in 2022. The unfavorable change was primarily driven by lower 2022 returns on plan assets. Other, Net Other, net income in 2023 was $19 million, compared to other, net expense of $20 million in 2022. The increase was primarily driven by unrealized net gains in investments.
The non-operating retirement benefit in 2024 was $179 million, compared to $148 million in 2023. The favorable change was primarily driven by higher 2023 returns on plan assets. Other, Net Other, net income in 2024 was $24 million, compared to other, net income of $19 million in 2023.
Product Sales and Segment Cost of Product Sales Product sales in 2023 increased $381 million, or 5%, from 2022, primarily as a result of higher volumes at Newport News in aircraft carrier construction, the Columbia class (SSBN 826) submarine program, and the Virginia class (SSN 774) submarine program, and higher volumes at Ingalls in surface combatants and amphibious assault ships, partially offset by lower volumes at Newport News in aircraft carrier RCOH and lower volumes at Ingalls in the NSC program.
Product Sales and Segment Cost of Product Sales Product sales in 2024 decreased $200 million, or 3%, from 2023, primarily due to lower volumes on aircraft carriers and cumulative catch-up adjustments on the Virginia class (SSN 774) submarine program at Newport News and lower volumes at Ingalls in amphibious assault ships, partially offset by higher volumes in the Columbia class (SSBN 826) program at Newport News and higher volumes at Ingalls in surface combatants.
As of December 31, 2023, $12 million in letters of credit were issued but undrawn and $360 million of surety bonds were outstanding. As of December 31, 2023, we had no other significant off-balance sheet arrangements. 50 GLOSSARY OF PROGRAMS Included below are brief descriptions of some of the programs discussed in this Annual Report on Form 10-K.
As of December 31, 2024, we had no other significant off-balance sheet arrangements. 52 Table of Contents GLOSSARY OF PROGRAMS Included below are brief descriptions of some of the programs discussed in this Annual Report on Form 10-K.
Because not all companies use identical calculations, our presentation of segment operating income may not be comparable to similarly titled measures of other companies.
Because not all companies use identical calculations, our presentation of segment operating income may not be comparable to similarly titled measures of other companies. Refer to "Segment Operating Results" in this section for details related to segment operating income, as well as activity within each segment.
The favorable change in non-current state income taxes was primarily driven by a decrease in deferred state income tax expense, primarily attributable to the timing of long-term contract income for tax purposes.
The favorable change in non-current state income taxes was driven by a decrease in deferred state income tax expense, primarily attributable to the reduction in the blended state income tax rate applied to our deferred tax balances.
The favorable change was primarily driven by higher interest rates under FAS. We expect the FAS/CAS Adjustment in 2024 to be a net benefit of approximately $115 million (($65) million FAS and $50 million CAS), primarily driven by the more immediate recognition of the 2023 asset returns, offset by lower interest rates under FAS.
The favorable change was primarily driven by higher interest rates under FAS. We expect the FAS/CAS Adjustment in 2025 to be a net benefit of approximately $148 million (($100) million FAS and $48 million CAS), primarily driven by higher discount rates under FAS.
The following table summarizes key components of cash flow provided by operating activities: Year Ended December 31 2023 over 2022 2022 over 2021 ($ in millions) 2023 2022 2021 Dollars Percent Dollars Percent Net earnings $ 681 $ 579 $ 544 $ 102 18 % $ 35 6 % Depreciation and amortization 355 366 301 (11) (3) % 65 22 % Provision for expected credit losses 6 (7) 7 13 186 % (14) (200) % Stock-based compensation 34 36 33 (2) (6) % 3 9 % Deferred income taxes (113) 2 98 (115) (5,750) % (96) (98) % Loss (gain) on investments in marketable securities (23) 25 (19) (48) (192) % 44 232 % Retiree benefits (75) (127) (78) 52 41 % (49) (63) % Trade working capital decrease (increase) 105 (108) (126) 213 197 % 18 14 % Net cash provided by operating activities $ 970 $ 766 $ 760 $ 204 27 % $ 6 1 % We have historically maintained a capital structure comprised of a mix of equity and debt financing.
The following table summarizes key components of cash flow provided by operating activities: Year Ended December 31 2024 over 2023 2023 over 2022 ($ in millions) 2024 2023 2022 Dollars Percent Dollars Percent Net earnings $ 550 $ 681 $ 579 $ (131) (19) % $ 102 18 % Depreciation and amortization of purchased intangible assets 326 347 358 (21) (6) % (11) (3) % Other non-cash transactions, net 10 29 15 (19) (66) % 14 93 % Stock-based compensation 23 34 36 (11) (32) % (2) (6) % Deferred income taxes (122) (113) 2 (9) (8) % (115) (5,750) % Loss (gain) on investments in marketable securities (22) (23) 25 1 4 % (48) (192) % Retiree benefits (112) (75) (127) (37) (49) % 52 41 % Trade working capital decrease (increase) (260) 90 (122) (350) (389) % 212 174 % Net cash provided by operating activities $ 393 $ 970 $ 766 $ (577) (59) % $ 204 27 % We have historically maintained a capital structure comprised of a mix of equity and debt financing.
The decrease in actuarial losses in 2023 was primarily driven by asset returns greater than expected returns of $263 million, updated mortality assumptions of $118 million, and amortization of previously unrecognized actuarial losses of $2 million, offset by lower discount rates used to determine benefit obligations of $144 million.
The increase in actuarial gains in 2024 was primarily driven by higher discount rates used to determine benefit obligations of $500 million and amortization of previously unrecognized actuarial losses of $5 million, which were offset by lower than expected asset returns of $24 million.
The following table presents funded and unfunded backlog by segment as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 Total Total ($ in millions) Funded Unfunded Backlog Funded Unfunded Backlog Ingalls $ 12,546 $ 3,201 $ 15,747 $ 9,231 $ 3,546 $ 12,777 Newport News 11,890 15,349 27,239 11,665 17,742 29,407 Mission Technologies 1,545 3,590 5,135 1,317 3,622 4,939 Total backlog $ 25,981 $ 22,140 $ 48,121 $ 22,213 $ 24,910 $ 47,123 We expect approximately 22% of the $48.1 billion total backlog as of December 31, 2023, to be converted into sales in 2024.
The following table presents funded and unfunded backlog by segment as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Total Total ($ in millions) Funded Unfunded Backlog Funded Unfunded Backlog Ingalls $ 13,519 $ 2,333 $ 15,852 $ 12,546 $ 3,201 $ 15,747 Newport News 12,079 14,666 26,745 11,890 15,349 27,239 Mission Technologies 1,824 4,292 6,116 1,545 3,590 5,135 Total backlog $ 27,422 $ 21,291 $ 48,713 $ 25,981 $ 22,140 $ 48,121 We expect approximately 21% of the $48.7 billion total backlog as of December 31, 2024, to be converted into sales during the year ending December 31, 2025.
While the DoD is normally prohibited from starting new programs or increasing funding on existing programs under a CR, the current CR includes an exception that will allow the DoD to deviate from typical restrictions and obligate funding to begin construction of the second Columbia class nuclear submarine (SSBN 827).
Congress passed a second CR in December 2024 that extended federal funding through March 14, 2025. 34 Table of Contents While the DoD is normally prohibited from starting new programs or increasing funding on existing programs under a CR, the current CR includes anomalies that will allow the DoD to deviate from typical restrictions and obligate funding to support procurement of the Virginia class and Columbia class submarine programs.
Naval nuclear support services include design, construction, maintenance, and disposal activities for in-service U.S. Navy nuclear ships worldwide through mobile and in-house capabilities. Services include maintenance services on nuclear reactor prototypes.
Naval nuclear support services Provide services to and in support of the U.S. Navy, ranging from services supporting the Navy's carrier and submarine fleets to maintenance services at U.S. Navy training facilities. Naval nuclear support services include design, construction, maintenance, and disposal activities for in-service U.S. Navy nuclear ships worldwide through mobile and in-house capabilities.

… 83 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+35 added−1 removed0 unchanged
Biggest changeAs of December 31, 2023, we had $145 million outstanding on the Term Loan and no indebtedness outstanding under our Revolving Credit Facility or our commercial paper program.
Biggest changeAs of December 31, 2024, we had no indebtedness outstanding under our credit facility or our commercial paper program. Inflation - Macroeconomic factors have contributed, and we expect will continue to contribute, to increasing cost inflation for raw materials, components, and supplies.
We include assumptions of anticipated cost growth in the development of our cost of completion estimates, but if inflationary conditions continue over the long-term, our cost assumptions may not be sufficient to cover all cost escalation or may impact the availability of resources to execute the respective contracts.
We include assumptions of anticipated cost growth in the development of our cost of 54 Table of Contents completion estimates, but if inflationary conditions continue over the long-term, our cost assumptions may not be sufficient to cover all cost escalation or may impact the availability of resources to execute the respective contracts.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks, including those relating to interest rates and inflation. Interest Rates - Our floating rate financial instruments subject to interest rate risk include a Term Loan, a $1.5 billion Revolving Credit Facility, and a $1 billion commercial paper program.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are exposed to certain market risks, including those relating to interest rates and inflation. Interest Rates - Our floating rate financial instruments subject to interest rate risk include a $1.7 billion credit facility and a $1.7 billion commercial paper program.
Inflation - Macroeconomic factors have contributed, and we expect will continue to contribute, to increasing cost inflation for raw materials, components, and supplies. We mitigate some cost inflation risk by negotiating long-term agreements with certain raw material suppliers and incorporating price escalation provisions in customer contracts to the extent possible.
We mitigate some cost inflation risk by negotiating long-term agreements with certain raw material suppliers and incorporating price escalation provisions in customer contracts to the extent possible.
Persistent cost inflation over the long-term may have an adverse impact on our financial position, results of operations, or cash flows. 53
Persistent cost inflation over the long-term may have an adverse impact on our financial position, results of operations, or cash flows. 55 Table of Contents ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Huntington Ingalls Industries, Inc.
Removed
Based on the amounts outstanding under our Term Loan as of December 31, 2023, an 52 increase of 1% in interest rates would increase the interest expense on our debt by approximately $1 million on an annual basis. In January 2024, we paid the remaining $145 million balance of the Term Loan.
Added
Newport News, Virginia Opinion on the Financial Statements We have audited the accompanying consolidated statements of financial position of Huntington Ingalls Industries, Inc. and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2024, the related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements").
Added
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with the accounting principles generally accepted in the United States of America.
Added
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 6, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.
Added
Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
Added
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.
Added
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Added
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Added
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Added
The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Added
Revenue – Shipbuilding Contracts — Refer to Notes 2 and 6 to the financial statements Critical Audit Matter Description The Company recognizes revenue on shipbuilding contracts with U.S. Government customers over time as the construction of the ship progresses because transfer of control to the customer is continuous.
Added
Ordinarily the Company’s contracts represent a single distinct performance obligation due to the highly interdependent and interrelated nature of the underlying goods.
Added
The use of the cost-to-cost method to measure performance progress over time is supported by clauses in the related contracts that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process.
Added
The accounting for these contracts involves judgment, particularly as it relates to the process of 56 Table of Contents estimating total material costs, labor costs, and profit for the performance obligation. Cost of sales is recognized as incurred, and revenues are determined by adding a proportionate amount of the estimated profit to the amount reported as cost of sales.
Added
Given the judgments necessary to estimate total material costs, labor costs, and profit in order to recognize revenue for certain shipbuilding contracts, auditing such estimates required extensive audit effort due to the complexity of the contracts and a high degree of auditor’s judgment, especially for contracts where there is limited historical data.
Added
How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s estimates of total material costs, labor costs, and profit in order to recognize revenue for certain shipbuilding contracts included the following, among others: • We tested the effectiveness of controls over shipbuilding contract revenue, including management’s controls over the estimates of total material costs, labor costs, and profit for performance obligations. • We developed independent estimates of revenue based on historical profit margins and current year recorded costs.
Added
We compared those estimates to revenue recognized by the Company. • We obtained the population of contracts during 2024 and assessed the financial and performance risk of the contracts based on our knowledge gained through prior-year audits of the Company, industry experience, and ongoing conversations with members of program management regarding the contract performance to identify contracts that we believe were riskier.
Added
For such contracts selected, we performed tailored audit procedures to address the specific characteristics of audit interest identified.
Added
Procedures performed included: ◦ Read the relevant portions of contracts including any recent contract modifications to understand contract terms, including incentives, fee arrangement, scope of work, and other unusual contract terms. ◦ Evaluated the estimates of total costs and profit for the performance obligation by performing some combination of the following: ◦ Performed inquiries with the business managers and corroborated the information gained from these inquiries with other parties who have detailed knowledge of the contract’s progress, issues being encountered, and overall production status. ◦ Evaluated the appropriateness and consistency of management’s material and labor estimates against historical performance, underlying performance metrics, and metrics of similar performance obligations. ◦ Evaluated the range and probabilities of reasonably possible outcomes and where management set its point estimate within the range and tested the accuracy and completeness of the key data used in developing estimates. ◦ Performed retrospective reviews when evaluating the thoroughness and precision of management’s estimation process by comparing costs incurred to date to previous estimates. ◦ Tested the appropriateness of the timing and accuracy of changes in estimates, including inspection of underlying source documentation, and consideration of any contradictory information. ◦ Evaluated the necessity and appropriateness of any constraints applied against any variable consideration. /s/ Deloitte & Touche LLP Richmond, Virginia February 6, 2025 We have served as the Company’s auditor since 2011. 57 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and the Board of Directors of Huntington Ingalls Industries, Inc.
Added
Newport News, Virginia Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Huntington Ingalls Industries, Inc. and subsidiaries (the "Company") as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Added
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Added
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated February 6, 2025, expressed an unqualified opinion on those financial statements.
Added
Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
Added
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB.
Added
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Added
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Added
Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Added
A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Added
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Added
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Richmond, Virginia February 6, 2025 58 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC.
Added
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Year Ended December 31 (in millions, except per share amounts) 2024 2023 2022 Sales and service revenues Product sales $ 7,464 $ 7,664 $ 7,283 Service revenues 4,071 3,790 3,393 Sales and service revenues 11,535 11,454 10,676 Cost of sales and service revenues Cost of product sales 6,500 6,467 6,225 Cost of service revenues 3,585 3,341 3,011 Income from operating investments, net 49 37 48 Other income and gains, net 9 120 1 General and administrative expenses 973 1,022 924 Operating income 535 781 565 Other income (expense) Interest expense (95) (95) (102) Non-operating retirement benefit 179 148 276 Other, net 24 19 (20) Earnings before income taxes 643 853 719 Federal and foreign income taxes 93 172 140 Net earnings $ 550 $ 681 $ 579 Basic earnings per share $ 13.96 $ 17.07 $ 14.44 Weighted-average common shares outstanding 39.4 39.9 40.1 Diluted earnings per share $ 13.96 $ 17.07 $ 14.44 Weighted-average diluted shares outstanding 39.4 39.9 40.1 Net earnings from above $ 550 $ 681 $ 579 Other comprehensive income Change in unamortized benefit plan costs 528 238 436 Tax expense for items of other comprehensive income (134) (61) (112) Other comprehensive income, net of tax 394 177 324 Comprehensive income $ 944 $ 858 $ 903 The accompanying notes are an integral part of these consolidated financial statements. 59 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC.
Added
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31 ($ in millions) 2024 2023 Assets Current Assets Cash and cash equivalents $ 831 $ 430 Accounts receivable, net 212 461 Contract assets 1,683 1,537 Inventoried costs, net 208 186 Income taxes receivable 204 183 Prepaid expenses and other current assets 90 83 Total current assets 3,228 2,880 Property, Plant, and Equipment Land and land improvements 377 351 Buildings and leasehold improvements 3,182 2,954 Machinery and other equipment 2,267 2,197 Capitalized software costs 207 261 6,033 5,763 Accumulated depreciation and amortization (2,583) (2,467) Property, plant, and equipment, net 3,450 3,296 Other Assets Operating lease assets 239 262 Goodwill 2,618 2,618 Other intangible assets, net of accumulated amortization of $1,118 million as of 2024 and $1,009 million as of 2023 782 891 Pension plan assets 1,422 888 Miscellaneous other assets 402 380 Total other assets 5,463 5,039 Total assets $ 12,141 $ 11,215 The accompanying notes are an integral part of these consolidated financial statements. 60 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC.
Added
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - CONTINUED December 31 ($ in millions) 2024 2023 Liabilities and Stockholders' Equity Current Liabilities Trade accounts payable $ 598 $ 554 Accrued employees’ compensation 392 382 Current portion of long-term debt 503 231 Current portion of postretirement plan liabilities 124 129 Current portion of workers’ compensation liabilities 201 224 Contract liabilities 774 1,063 Other current liabilities 399 449 Total current liabilities 2,991 3,032 Long-term debt 2,700 2,214 Pension plan liabilities 142 212 Other postretirement plan liabilities 209 241 Workers’ compensation liabilities 443 449 Long-term operating lease liabilities 205 228 Deferred tax liabilities 378 367 Other long-term liabilities 407 379 Total liabilities 7,475 7,122 Commitments and Contingencies (Note 15) Stockholders’ Equity Common stock, $0.01 par value; 150,000,000 shares authorized; 53,714,128 issued and 39,129,419 outstanding as of 2024, and 53,595,748 issued and 39,618,880 outstanding as of 2023 1 1 Additional paid-in capital 2,045 2,045 Retained earnings 5,097 4,755 Treasury stock (2,449) (2,286) Accumulated other comprehensive loss (28) (422) Total stockholders’ equity 4,666 4,093 Total liabilities and stockholders’ equity $ 12,141 $ 11,215 The accompanying notes are an integral part of these consolidated financial statements. 61 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC.
Added
CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31 ($ in millions) 2024 2023 2022 Operating Activities Net earnings $ 550 $ 681 $ 579 Adjustments to reconcile to net cash provided by operating activities Depreciation 217 219 218 Amortization of purchased intangibles 109 128 140 Other non-cash transactions, net 10 29 15 Stock-based compensation 23 34 36 Deferred income taxes (122) (113) 2 Loss (gain) on investments in marketable securities (22) (23) 25 Change in Accounts receivable 256 168 (196) Contract assets (146) (297) 70 Inventoried costs (22) (3) (22) Prepaid expenses and other current assets (33) (42) 20 Accounts payable and accruals (315) 264 6 Retiree benefits (112) (75) (127) Net cash provided by operating activities 393 970 766 Investing Activities Capital expenditures Capital expenditure additions (367) (292) (284) Grant proceeds for capital expenditures 14 14 12 Investment in affiliates — (24) (5) Proceeds from equity method investment — 63 6 Other investing activities, net 5 3 3 Net cash used in investing activities (348) (236) (268) Financing Activities Proceeds from issuance of long-term debt 1,000 — — Repayment of long-term debt (229) (480) (400) Proceeds from line of credit borrowings 42 — 24 Repayment of line of credit borrowings (42) — (24) Debt issuance costs (17) — — Dividends paid (206) (200) (192) Repurchases of common stock (162) (75) (52) Employee taxes on certain share-based payment arrangements (25) (13) (14) Other financing activities, net (5) (3) — Net cash provided by (used in) financing activities 356 (771) (658) Change in cash and cash equivalents 401 (37) (160) Cash and cash equivalents, beginning of period 430 467 627 Cash and cash equivalents, end of period $ 831 $ 430 $ 467 Supplemental Cash Flow Disclosure Cash paid for interest $ 101 $ 101 $ 100 Non-Cash Investing and Financing Activities Capital expenditures accrued in accounts payable $ 23 $ 29 $ 12 The accompanying notes are an integral part of these consolidated financial statements. 62 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC.
Added
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ($ in millions) Common Stock Additional Paid-in Capital Retained Earnings (Deficit) Treasury Stock Accumulated Other Comprehensive Income (Loss) Total Stockholders' Equity Balance as of December 31, 2021 $ 1 $ 1,998 $ 3,891 $ (2,159) $ (923) $ 2,808 Net earnings — — 579 — — 579 Dividends declared ($4.78 per share) — — (192) — — (192) Stock compensation — 24 (2) — — 22 Other comprehensive income, net of tax — — — — 324 324 Treasury stock activity — — — (52) — (52) Balance as of December 31, 2022 1 2,022 4,276 (2,211) (599) 3,489 Net earnings — — 681 — — 681 Dividends declared ($5.02 per share) — — (200) — — (200) Stock compensation — 23 (2) — — 21 Other comprehensive income, net of tax — — — — 177 177 Treasury stock activity — — — (75) — (75) Balance as of December 31, 2023 1 2,045 4,755 (2,286) (422) 4,093 Net earnings — — 550 — — 550 Dividends declared ($5.25 per share) — — (206) — — (206) Stock compensation — — (2) — — (2) Other comprehensive income, net of tax — — — — 394 394 Treasury stock activity — — — (163) — (163) Balance as of December 31, 2024 $ 1 $ 2,045 $ 5,097 $ (2,449) $ (28) $ 4,666 The accompanying notes are an integral part of these consolidated financial statements. 63 Table of Contents HUNTINGTON INGALLS INDUSTRIES, INC.
Added
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS TABLE OF CONTENTS Page

Other HII 10-K year-over-year comparisons