HII faces uncertainty in the economy, industry, and company. Labor shortages, supply chain disruptions, and inflation negatively impact results. Government budget uncertainty, including potential continuing resolutions, poses a risk. Geopolitical instability and market volatility also affect the business. Potential losses from legal proceedings (antitrust, COVID insurance, government investigations, asbestos-related claims) and environmental remediation are possible but not yet fully estimated. Fluctuations in contract costs and revenue recognition are also risks.
Financial Upside
HII has a large backlog of $49.4 billion, primarily from U.S. government contracts. New contract awards totaled $9.8 billion in the nine months ended September 30, 2024. The company's commercial paper program increased borrowing capacity to $1.7 billion. Higher volumes in some segments (Mission Technologies) and favorable contract adjustments contribute to potential revenue growth. The company expects to recognize a portion of its backlog as revenue through 2025 and beyond.
