The U.S. military is increasingly relying on companies like Huntington Ingalls Industries to build the vessels needed for international operations. As conflicts in the Middle East and Ukraine raise the need for naval power, HII has seen its business expand.
In the second quarter, HII's revenue climbed 10.9% to $3.4 billion. Its Ingalls Shipbuilding division generated $845 million in revenue, a 16.7% increase from a year earlier. The division is producing amphibious assault ships, which are in higher demand as the U.S. Navy looks to bolster its fleet.
Newport News Shipbuilding, HII's other major division, also saw revenue rise. The unit, which builds aircraft carriers and submarines, reported $1.8 billion in revenue, a 15.3% increase. Operating margins for the company improved to 6.1%, up from 5.3% in the second quarter of the prior year.
HII's net earnings jumped to $208 million, or $5.27 per share, in the second quarter. That far outpaced Wall Street's expectations of $3.82 per share. The company also raised its full-year guidance, predicting shipbuilding revenue would reach about $10.3 billion and operating margins would hit 6.25%.
With ongoing conflicts in key regions, demand for naval vessels is expected to remain strong. Management confirmed its free cash flow forecast would hit around $550 million, signaling confidence in future operations.