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Table of Contents                                        
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ______________________________________________________________
FORM 10-Q
 ______________________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 001-34910
  ______________________________________________________________
HUNTINGTON INGALLS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 ______________________________________________________________
Delaware90-0607005
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
4101 Washington Avenue Newport News, Virginia 23607
(Address of principal executive offices and zip code)
(757380-2000
(Registrant’s telephone number, including area code)
 ______________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockHIINew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. 
Large Accelerated Filer
Accelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes No  
As of October 25, 2024, 39,129,347 shares of the registrant's common stock were outstanding.



Table of Contents                                        
TABLE OF CONTENTS
 
  
PART I – FINANCIAL INFORMATIONPage
Item 1.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Item 2.
Item 3.
Item 4.
PART II – OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



Table of Contents                                        
HUNTINGTON INGALLS INDUSTRIES, INC.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
 
 Three Months Ended September 30Nine Months Ended September 30
(in millions, except per share amounts)2024202320242023
Sales and service revenues
Product sales$1,761 $1,835 $5,474 $5,543 
Service revenues988 981 3,057 2,734 
Sales and service revenues2,749 2,816 8,531 8,277 
Cost of sales and service revenues
Cost of product sales1,556 1,541 4,720 4,711 
Cost of service revenues871 859 2,682 2,411 
Income from operating investments, net12 9 35 25 
General and administrative expenses252 253 739 711 
Operating income82 172 425 469 
Other income (expense)
Interest expense(23)(22)(68)(70)
Non-operating retirement benefit44 37 134 111 
Other, net9 2 21 11 
Earnings before income taxes112 189 512 521 
Federal and foreign income tax expense11 41 85 114 
Net earnings$101 $148 $427 $407 
Basic earnings per share$2.56 $3.70 $10.81 $10.18 
Weighted-average common shares outstanding39.5 40.0 39.5 40.0 
Diluted earnings per share$2.56 $3.70 $10.81 $10.18 
Weighted-average diluted shares outstanding39.5 40.0 39.5 40.0 
Dividends declared per share$1.30 $1.24 $3.90 $3.72 
Net earnings from above$101 $148 $427 $407 
Other comprehensive income
Change in unamortized benefit plan costs5 4 14 13 
Tax expense for items of other comprehensive income(2)(2)(4)(4)
Other comprehensive income, net of tax3 2 10 9 
Comprehensive income$104 $150 $437 $416 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

Table of Contents                                        
HUNTINGTON INGALLS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

($ in millions)September 30, 2024December 31, 2023
Assets
Current Assets
Cash and cash equivalents$10 $430 
Accounts receivable, net of allowance for expected credit losses of $2 million as of 2024 and $8 million as of 2023
436 461 
Contract assets1,714 1,537 
Inventoried costs205 186 
Income taxes receivable173 183 
Prepaid expenses and other current assets91 83 
Total current assets2,629 2,880 
Property, plant, and equipment, net of accumulated depreciation of $2,544 million as of 2024 and $2,467 million as of 2023
3,384 3,296 
Operating lease assets249 262 
Goodwill2,618 2,618 
Other intangible assets, net of accumulated amortization of $1,091 million as of 2024 and $1,009 million as of 2023
809 891 
Pension plan assets985 888 
Miscellaneous other assets408 380 
Total assets$11,082 $11,215 
Liabilities and Stockholders' Equity
Current Liabilities
Trade accounts payable$579 $554 
Accrued employees’ compensation345 382 
Short-term debt and current portion of long-term debt898 231 
Current portion of postretirement plan liabilities129 129 
Current portion of workers’ compensation liabilities224 224 
Contract liabilities743 1,063 
Other current liabilities418 449 
Total current liabilities3,336 3,032 
Long-term debt1,709 2,214 
Pension plan liabilities219 212 
Other postretirement plan liabilities232 241 
Workers’ compensation liabilities448 449 
Long-term operating lease liabilities213 228 
Deferred tax liabilities316 367 
Other long-term liabilities406 379 
Total liabilities6,879 7,122 
Commitments and Contingencies (Note 10)
Stockholders’ Equity
Common stock, $0.01 par value; 150,000,000 shares authorized; 53,713,746 shares issued and 39,129,037 shares outstanding as of 2024, and 53,595,748 shares issued and 39,618,880 shares outstanding as of 2023
1 1 
Additional paid-in capital2,037 2,045 
Retained earnings5,026 4,755 
Treasury stock(2,449)(2,286)
Accumulated other comprehensive loss(412)(422)
Total stockholders’ equity4,203 4,093 
Total liabilities and stockholders’ equity$11,082 $11,215 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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HUNTINGTON INGALLS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Nine Months Ended September 30
($ in millions)20242023
Operating Activities:
Net earnings$427 $407 
Adjustments to reconcile net cash provided by operating activities:
Depreciation160 163 
Amortization of purchased intangibles82 96 
Other non-cash transactions, net7 16 
Stock-based compensation15 27 
Deferred income taxes(55)(81)
Gain on investments in marketable securities(22)(10)
Change in
Accounts receivable31 (62)
Contract assets(177)(60)
Inventoried costs(19)(12)
Prepaid expenses and other assets(9)(66)
Accounts payable and accruals(354)45 
Retiree benefits(84)(55)
Net cash provided by operating activities2 408 
Investing Activities:
Capital expenditures
Capital expenditure additions(253)(164)
Grant proceeds for capital expenditures14 14 
Investment in affiliates (24)
Proceeds from equity method investments 61 
Other investing activities, net1 2 
Net cash used in investing activities(238)(111)
Financing Activities:
Repayment of long-term debt(229)(455)
Proceeds from revolving credit facility borrowings42 — 
Repayment of revolving credit facility borrowings(42)— 
Net borrowings on commercial paper396 — 
Debt issuance costs(7)— 
Dividends paid(154)(149)
Repurchases of common stock(162)(37)
Employee taxes on certain share-based payment arrangements(25)(13)
Other financing activities, net(3)(1)
Net cash used in financing activities(184)(655)
Change in cash and cash equivalents(420)(358)
Cash and cash equivalents, beginning of period430 467 
Cash and cash equivalents, end of period$10 $109 
Supplemental Cash Flow Disclosure
Cash paid for income taxes (net of refunds)$170 $227 
Cash paid for interest$66 $63 
Non-Cash Investing and Financing Activities
Capital expenditures accrued in accounts payable$12 $6 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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HUNTINGTON INGALLS INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) 
Three Months Ended September 30, 2024 and 2023
($ in millions)
Common StockAdditional Paid-in CapitalRetained Earnings (Deficit)Treasury StockAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Balance as of June 30, 2023$1 $2,030 $4,434 $(2,227)$(592)$3,646 
Net earnings— — 148 — — 148 
Dividends declared ($1.24 per share)
— — (50)— — (50)
Stock-based compensation— 8 — — — 8 
Other comprehensive income, net of tax— — — — 2 2 
Treasury stock activity— — — (21)— (21)
Balance as of September 30, 2023$1 $2,038 $4,532 $(2,248)$(590)$3,733 
Balance as of June 30, 2024$1 $2,029 $4,977 $(2,414)$(415)$4,178 
Net earnings  101   101 
Dividends declared ($1.30 per share)
  (52)  (52)
Stock-based compensation 8    8 
Other comprehensive income, net of tax    3 3 
Treasury stock activity   (35) (35)
Balance as of September 30, 2024$1 $2,037 $5,026 $(2,449)$(412)$4,203 
Nine Months Ended September 30, 2024 and 2023
($ in millions)
Common StockAdditional Paid-in CapitalRetained Earnings (Deficit)Treasury StockAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Balance as of December 31, 2022$1 $2,022 $4,276 $(2,211)$(599)$3,489 
Net earnings— — 407 — — 407 
Dividends declared ($3.72 per share)
— — (149)— — (149)
Stock-based compensation— 16 (2)— — 14 
Other comprehensive income, net of tax— — — — 9 9 
Treasury stock activity— — — (37)— (37)
Balance as of September 30, 2023$1 $2,038 $4,532 $(2,248)$(590)$3,733 
Balance as of December 31, 2023$1 $2,045 $4,755 $(2,286)$(422)$4,093 
Net earnings  427   427 
Dividends declared ($3.90 per share)
  (154)  (154)
Stock-based compensation (8)(2)  (10)
Other comprehensive income, net of tax    10 10 
Treasury stock activity   (163) (163)
Balance as of September 30, 2024$1 $2,037 $5,026 $(2,449)$(412)$4,203 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


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HUNTINGTON INGALLS INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. DESCRIPTION OF BUSINESS

Huntington Ingalls Industries, Inc. ("HII" or the "Company") is a global, all-domain defense partner, building and delivering the world’s most powerful, survivable naval ships and technologies that safeguard America’s seas, sky, land, space, and cyber. HII is organized into three reportable segments: Ingalls Shipbuilding ("Ingalls"), Newport News Shipbuilding ("Newport News"), and Mission Technologies. For more than a century, the Company's Ingalls segment in Mississippi and Newport News segment in Virginia have built more ships in more ship classes than any other U.S. naval shipbuilder, making HII America's largest shipbuilder. The Mission Technologies segment develops integrated solutions that enable today's connected, all-domain force.

2. BASIS OF PRESENTATION

Principles of Consolidation - The unaudited condensed consolidated financial statements of HII and its subsidiaries have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the instructions to Form 10-Q promulgated by the Securities and Exchange Commission ("SEC"). As used in the Notes to the Condensed Consolidated Financial Statements (Unaudited), the terms "HII" and "the Company" refer to HII and its subsidiaries. All intercompany transactions and balances are eliminated in consolidation. For classification of current assets and liabilities related to its long-term production contracts, the Company uses the duration of these contracts as its operating cycle, which is generally longer than one year. Additionally, certain prior year amounts have been reclassified to conform to the current year presentation.

These unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature considered necessary by management for a fair presentation of the unaudited condensed consolidated financial position, results of operations, and cash flows and should be read in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Annual Report on Form 10-K").

The quarterly information is labeled using a calendar convention; that is, first quarter is consistently labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is management's long-standing practice to establish interim closing dates using a "fiscal" calendar, which requires the businesses to close their books on a Friday near these quarter-end dates in order to normalize the potentially disruptive effects of quarterly closings on business processes. This practice only exists for interim periods within a reporting year.

Accounting Estimates - The preparation of the Company's unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information, and actual results could differ materially from those estimates.

Fair Value of Financial Instruments - Except for the Company's long-term debt, the carrying amounts of the Company's financial instruments that are recorded at historical cost approximate fair value due to the short-term nature of the instruments and low credit risk associated with the respective counterparties.

The Company maintains multiple grantor trusts to fund certain non-qualified pension plans. These trusts were valued at $235 million and $220 million as of September 30, 2024, and December 31, 2023, respectively, and are presented within miscellaneous other assets within the unaudited condensed consolidated statements of financial position. These trusts consist primarily of investments in marketable securities, which are held at fair value within Level 1 of the fair value hierarchy.

The estimated fair values of the Company's total long-term debt (including current portion), excluding finance lease liabilities, as of September 30, 2024, and December 31, 2023, were $2,146 million and $2,309 million, respectively. The estimated fair values of the current portion of the Company's long-term debt, excluding finance lease liabilities, were $496 million and $229 million as of September 30, 2024, and December 31, 2023, respectively. The fair values of the Company's long-term debt were calculated based on recent trades of the Company's debt instruments in inactive markets, which fall within Level 2 of the fair value hierarchy.

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Debt – In September 2024, the Company amended and restated its existing $1.5 billion credit facility, increasing the capacity thereunder to $1.7 billion and extending the maturity date for five years from signing (the “Second Amended and Restated Revolving Credit Facility”). The Second Amended and Restated Revolving Credit Facility has a variable interest rate on outstanding borrowings based on the Secured Overnight Financing Rate (“SOFR”) plus an interest spread based upon the Company’s credit rating, which may vary between 1.225% and 2.100%. The Second Amended and Restated Revolving Credit Facility also has a commitment fee on unutilized amounts based on the Company’s credit rating, which may vary between 0.125% and 0.300%. The Second Amended and Restated Revolving Credit Facility includes a letter of credit sub-facility of $300 million.

As of September 30, 2024, the Company had not drawn on the Second Amended and Restated Revolving Credit Facility. Based on the Company’s current credit rating, the interest rate spread on drawn amounts would be 1.475% and the commitment fee would be 0.200%.

The Second Amended and Restated Revolving Credit Facility contains customary affirmative and negative covenants and events of default, as well as a financial covenant based on a maximum total leverage ratio. Each of the Company's existing and future material wholly owned domestic subsidiaries, except those that are specifically designated as unrestricted subsidiaries, are and will be guarantors under the Second Amended and Restated Revolving Credit Facility.

Additionally, in September 2024, the Company's borrowing capacity under its commercial paper program increased from $1 billion to $1.7 billion.

3. ACCOUNTING STANDARDS UPDATES

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new guidance requires, among other things, segment disclosures of significant expenses that are regularly reported to the chief operating decision maker and the nature of segment expense information used to manage operations. The new guidance is effective on a retrospective basis for annual reporting periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company does not expect the new guidance to have a material impact on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance requires disaggregated information about the effective tax rate reconciliation and additional information on taxes paid that meet a quantitative threshold. The new guidance is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted. The Company plans to early adopt the new guidance on a retrospective basis for the annual reporting period ending December 31, 2024, and does not expect the new guidance to have a material impact on its consolidated financial statements.

Other accounting pronouncements issued but not effective until after December 31, 2024, are not expected to have a material impact on the Company's consolidated financial position, results of operations, or cash flows.

4. STOCKHOLDERS' EQUITY

Treasury Stock - In January 2024, the Company's board of directors authorized an increase in the Company's stock repurchase program from $3.2 billion to $3.8 billion and an extension of the term of the program to December 31, 2028. Repurchases are made from time to time at management's discretion in accordance with applicable federal securities laws. For the nine months ended September 30, 2024, the Company repurchased 607,841 shares at an aggregate cost of $163 million, including $1 million of accrued excise tax. For the nine months ended September 30, 2023, the Company repurchased 175,555 shares at an aggregate cost of $37 million. The cost of purchased shares is recorded as treasury stock in the unaudited condensed consolidated statements of financial position.

Dividends - The Company paid cash dividends totaling $154 million and $149 million for the nine months ended September 30, 2024 and 2023, respectively.

Accumulated Other Comprehensive Loss - Other comprehensive income (loss) refers to gains and losses recorded as an element of stockholders' equity but excluded from net earnings. The accumulated other comprehensive loss was comprised of unamortized benefit plan costs of $412 million and $422 million as of September 30, 2024, and December 31, 2023, respectively.

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The changes in accumulated other comprehensive loss by component for the three and nine months ended September 30, 2024 and 2023, were as follows:

($ in millions)Benefit PlansOtherTotal
Balance as of June 30, 2023$(592)$— $(592)
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost1
3 — 3 
Amortization of net actuarial loss1
1 — 1 
Tax expense for items of other comprehensive income(2)— (2)
Net current period other comprehensive income2 — 2 
Balance as of September 30, 2023$(590)$— $(590)
Balance as of June 30, 2024$(415)$— $(415)
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost1
4  4 
Amortization of net actuarial loss1
1  1 
Tax expense for items of other comprehensive income(2) (2)
Net current period other comprehensive income3  3 
Balance as of September 30, 2024$(412)$ $(412)

($ in millions)Benefit PlansOtherTotal
Balance as of December 31, 2022$(599)$— $(599)
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost1
11 — 11 
Amortization of net actuarial loss1
2 — 2 
Tax expense for items of other comprehensive income(4)— (4)
Net current period other comprehensive income9 — 9 
Balance as of September 30, 2023$(590)$— $(590)
Balance as of December 31, 2023$(422)$— $(422)
Amounts reclassified from accumulated other comprehensive loss
Amortization of prior service cost1
11  11 
Amortization of net actuarial loss1
3  3 
Tax expense for items of other comprehensive income(4) (4)
Net current period other comprehensive income10  10 
Balance as of September 30, 2024$(412)$ $(412)
1 These accumulated comprehensive loss components are included in the computation of net periodic benefit cost. See Note 11: Employee Pension and Other Postretirement Benefits. The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for each of the three months ended September 30, 2024 and 2023, was $2 million. The tax expense recorded in stockholders' equity for the amounts reclassified from accumulated other comprehensive loss for each of the nine months ended September 30, 2024 and 2023, was $4 million.


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5. EARNINGS PER SHARE

Basic and diluted earnings per common share were calculated as follows:
 Three Months Ended September 30Nine Months Ended September 30
(in millions, except per share amounts)2024202320242023
Net earnings$101 $148 $427 $407 
Weighted-average common shares outstanding39.5 40.0 39.5 40.0 
Net dilutive effect of stock awards —  — 
Dilutive weighted-average common shares outstanding39.5 40.0 39.5 40.0 
Earnings per share - basic$2.56 $3.70 $10.81 $10.18 
Earnings per share - diluted$2.56 $3.70 $10.81 $10.18 

Under the treasury stock method, the Company has excluded from the diluted share amounts presented above the effects of 0.4 million Restricted Performance Stock Rights ("RPSRs") and 0.1 million Restricted Stock Rights ("RSRs") for each of the three and nine months ended September 30, 2024, and 0.4 million RPSRs for each of the three and nine months ended September 30, 2023.

6. REVENUE

Disaggregation of Revenue

The following tables present revenues on a disaggregated basis, in a manner that reconciles with the Company's reportable segment disclosures, for the following categories: product versus service type, customer type, contract type, and major program. The Company believes that this level of disaggregation provides investors with information to evaluate the Company’s financial performance and provides the Company with information to make capital allocation decisions in the most appropriate manner. For more information on the Company's contracts, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's 2023 Annual Report on Form 10-K.

The following tables present revenues on a disaggregated basis:
Three Months Ended September 30, 2024
($ in millions)IngallsNewport NewsMission TechnologiesIntersegment EliminationsTotal
Revenue Type
Product sales$569 $1,163 $29 $— $1,761 
Service revenues93 249 646 — 988 
Intersegment2 — 34 (36)— 
Sales and service revenues$664 $1,412 $709 $(36)$2,749 
Customer Type
Federal$662 $1,412 $673 $— $2,747 
Commercial— — 2 — 2 
Intersegment2 — 34 (36)— 
Sales and service revenues$664 $1,412 $709 $(36)$2,749 
Contract Type
Firm fixed-price$— $1 $83 $— $84 
Fixed-price incentive568 753 3 — 1,324 
Cost-type94 658 543 — 1,295 
Time and materials— — 46 — 46 
Intersegment2 — 34 (36)— 
Sales and service revenues$664 $1,412 $709 $(36)$2,749 

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Three Months Ended September 30, 2023
($ in millions)IngallsNewport NewsMission TechnologiesIntersegment EliminationsTotal
Revenue Type
Product sales$637 $1,170 $28 $— $1,835 
Service revenues73 281 627 — 981 
Intersegment1 2 30 (33)— 
Sales and service revenues$711 $1,453 $685 $(33)$2,816 
Customer Type
Federal$710 $1,451 $647 $— $2,808 
Commercial— — 7 — 7 
State and local government agencies— — 1 — 1 
Intersegment1 2 30 (33)— 
Sales and service revenues$711 $1,453 $685 $(33)$2,816 
Contract Type
Firm fixed-price$— $1 $77 $— $78 
Fixed-price incentive637 779 3 — 1,419 
Cost-type73 671 521 — 1,265 
Time and materials— — 54 — 54 
Intersegment1 2 30 (33)— 
Sales and service revenues$711 $1,453 $685 $(33)$2,816 

Nine Months Ended September 30, 2024
($ in millions)IngallsNewport NewsMission TechnologiesIntersegment EliminationsTotal
Revenue Type
Product sales$1,786 $3,602 $86 $— $5,474 
Service revenues240 777 2,040 — 3,057 
Intersegment5 2 98 (105)— 
Sales and service revenues$2,031 $4,381 $2,224 $(105)$8,531 
Customer Type
Federal$2,026 $4,378 $2,120 $— $8,524 
Commercial— 1 5 — 6 
State and local government agencies— — 1 — 1 
Intersegment5 2 98 (105)— 
Sales and service revenues$2,031 $4,381 $2,224 $(105)$8,531 
Contract Type
Firm fixed-price$2 $5 $250 $— $257 
Fixed-price incentive1,784 2,353 8 — 4,145 
Cost-type240 2,021 1,735 — 3,996 
Time and materials— — 133 — 133 
Intersegment5 2 98 (105)— 
Sales and service revenues$2,031 $4,381 $2,224 $(105)$8,531 


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Nine Months Ended September 30, 2023
($ in millions)IngallsNewport NewsMission TechnologiesIntersegment EliminationsTotal
Revenue Type
Product sales$1,775 $3,688 $80 $— $5,543 
Service revenues171 777 1,786 — 2,734 
Intersegment6 3 88 (97)— 
Sales and service revenues$1,952 $4,468 $1,954 $(97)$8,277 
Customer Type
Federal$1,946 $4,465 $1,836 $— $8,247 
Commercial— — 29 — 29 
State and local government agencies— — 1 — 1 
Intersegment6 3 88 (97)— 
Sales and service revenues$1,952 $4,468 $1,954 $(97)$8,277 
Contract Type
Firm fixed-price$2 $3 $236 $— $241 
Fixed-price incentive1,776 2,432 4 — 4,212 
Cost-type168 2,030 1,464 — 3,662 
Time and materials— — 162 — 162 
Intersegment6 3 88 (97)— 
Sales and service revenues$1,952 $4,468 $1,954 $(97)$8,277 

Three Months Ended September 30Nine Months Ended September 30
($ in millions)2024202320242023
Major Programs
Amphibious assault ships$358 $396 $1,123 $1,093 
Surface combatants and coast guard cutters304 313 901 853 
Other2 2 7 6 
Total Ingalls664 711 2,031 1,952 
Aircraft carriers768 782 2,391 2,447 
Submarines522 515 1,601 1,592 
Other122 156 389 429 
Total Newport News1,412 1,453 4,381 4,468 
C5ISR, CEW&S, LVC593 567 1,857 1,609 
Other116 118 367 345 
Total Mission Technologies709 685 2,224 1,954 
Intersegment eliminations(36)(33)(105)(97)
Sales and service revenues$2,749 $2,816 $8,531 $8,277 

As of September 30, 2024, the Company had $49.4 billion of remaining performance obligations. The Company expects to recognize approximately 30% of its remaining performance obligations as revenue through 2025, an additional 30% through 2027, and the balance thereafter.


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Cumulative Catch-up Revenue Adjustments

The following table presents the effect of net cumulative catch-up revenue adjustments on operating income and diluted earnings per share:
Three Months Ended September 30Nine Months Ended September 30
($ in millions, except per share amounts)2024202320242023
Effect on operating income$(72)$21 $(46)$50 
Effect on diluted earnings per share$(1.42)$0.41 $(0.91)$0.99 

The Company’s multi-year shipbuilding contracts with the U.S. Government are routinely modified as the result of unpriced change orders arising in the ordinary course of business. These anticipated changes are accounted for as contract modifications when the scope of the work has been approved and it is probable that the price will be approved. The Company recognizes variable consideration included in the transaction price for a modified contract to the extent the Company believes a significant reversal of revenue is not probable.

For the three and nine months ended September 30, 2024, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three months ended September 30, 2024, cumulative catch-up revenue adjustments included unfavorable adjustments of $34 million on Block IV of the Virginia class (SSN 774) submarine program, $14 million on the refueling and complex overhaul ("RCOH") of USS John C. Stennis (CVN 74), and $16 million on the construction of Enterprise (CVN 80) and Doris Miller (CVN 81) at the Company's Newport News segment. For the nine months ended September 30, 2024, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

For the three and nine months ended September 30, 2023, no individual favorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income. For the three and nine months ended September 30, 2023, no individual unfavorable cumulative catch-up revenue adjustment was material to the Company's unaudited condensed consolidated statements of operations and comprehensive income.

Contract Balances

The Company reports contract balances in a net contract asset or contract liability position on a contract-by-contract basis at the end of each reporting period. Net contract assets were comprised as follows:
($ in millions)September 30, 2024December 31, 2023
Contract assets$1,714 $1,537 
Contract liabilities743 1,063 
Net contract assets$971 $474 

The Company’s net contract assets increased $497 million from December 31, 2023, to September 30, 2024, primarily as a result of the timing of billings across programs on certain U.S. Navy contracts. For the three and nine months ended September 30, 2024, the Company recognized revenue of $6 million and $930 million, respectively, related to its contract liabilities as of December 31, 2023. For the three and nine months ended September 30, 2023, the Company recognized revenue of $5 million and $