The Company acquired substantially all of the assets of W International for $133 million in January 2025, expanding shipbuilding capacity within the Newport News segment. This acquisition is expected to bring synergies and value to the Newport News segment.

New contract awards during the three months ended March 31, 2025, totaled approximately $2.1 billion. This was primarily driven by awards at Newport News, indicating continued demand for the company's services.

Total backlog decreased slightly from $48.7 billion as of December 31, 2024, to $48.0 billion as of March 31, 2025. The backlog remains strong, indicating future revenue potential, but the decrease could signal slowing growth.

The Newport News segment continues to experience performance challenges in the construction of aircraft carriers and the Virginia class (SSN 774) submarine program. Cumulative catch-up revenue adjustments included significant unfavorable performance adjustments on these programs, offset by contract incentives.

Mission Technologies segment operating income increased by $12 million, or 43%, year-over-year, driven by higher performance in cyber, electronic warfare & space and uncrewed systems. This indicates successful execution in key growth areas.

On May 1, 2025, the Company is repaying $500 million aggregate principal amount of its 3.844% senior notes upon their maturity. The repayment is funded using a combination of cash on hand and proceeds from the Company's commercial paper program.

The federal budget environment remains a significant long-term risk, and continued budget pressures could have serious implications for defense discretionary spending, the defense industrial base, including HII, and the customers, employees, suppliers, subcontractors, investors, and communities that rely on companies in the defense industrial base.

The global geopolitical and economic environment continues to be impacted by uncertainty, heightened geopolitical tensions, and instability. 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.

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.

For more than a century, our Ingalls Shipbuilding segment and Newport News Shipbuilding segment have built more ships in more ship classes than any other U.S. naval shipbuilder, making us America's largest shipbuilder.

We conduct most of our business with the U.S. Government, primarily the Department of Defense. As prime contractor, principal subcontractor, team member, or partner, we participate in many high-priority U.S. defense programs.

Columbia class SSBNs will carry approximately 70 percent of the nation's nuclear arsenal. The Columbia class (SSBN 826) program plan of record is to construct 12 new SSBNs to replace the current aging Ohio class.

General and administrative expenses for the three months ended March 31, 2025, increased $14 million from the same period in 2024, primarily due to higher overhead costs, partially offset by lower state income taxes.

Ingalls revenues, including intersegment sales, for the three months ended March 31, 2025, decreased $18 million, or 3%, from the same period in 2024, primarily driven by lower volumes in amphibious assault ships.

The Company's Newport News segment continues to experience performance challenges in the construction of aircraft carriers and the Virginia class (SSN 774) submarine program.

Mission Technologies revenues, including intersegment sales, for the three months ended March 31, 2025, decreased $15 million, or 2%, from the same period in 2024, primarily due to lower volumes in C5ISR, partially offset by higher volumes in cyber, electronic warfare & space.

For the three months ended March 31, 2025, our effective tax rate differed from the federal statutory corporate income tax rate of 21% primarily due to research and development tax credits for the current period.

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.

For the three months ended March 31, 2025, the Company did not repurchase any shares under the stock repurchase program. This may indicate a shift in capital allocation strategy.

For 2025, we expect our capital expenditures for maintenance and sustainment to be approximately 1.0% to 1.5% of annual revenues and our discretionary capital expenditures to be approximately 2.0% to 2.5% of annual revenues. Our capital expenditures are expected to increase due to investments to expand our shipbuilding capacity.

The Company paid cash dividends totaling $53 million and $51 million for the three months ended March 31, 2025 and 2024, respectively.

HII and its predecessors-in-interest are defendants in a longstanding series of cases that have been and continue to be filed in various jurisdictions around the country, wherein former and current employees and various third parties allege exposure to asbestos containing materials while on or associated with HII premises or while working on vessels constructed or repaired by HII.

The Company is involved in legal proceedings before various courts and administrative agencies, and is periodically subject to government examinations, inquiries and investigations.

Of the Company's over 44,000 employees, approximately 45% are covered by a total of nine collective bargaining agreements. The Company believes its relationship with its employees is satisfactory.

Final defense appropriations provided by the CR broadly supported shipbuilding programs, including funding for three Arleigh Burke class (DDG 51) guided missile destroyers, one Virginia class (SSN 774) fast attack submarine, one San Antonio class (LPD 17) Amphibious Transport Dock, the RCOH for USS Harry S. Truman (CVN 75), and funding to support Columbia class (SSBN 826) submarines, CVN, and LHA programs.

As of March 31, 2025 and 2024, the cumulative amounts of payments withheld by the U.S. Government under our contracts subject to these regulations were not material to our liquidity or cash flows.

The federal budget environment remains a significant long-term risk, and continued budget pressures could have serious implications for defense discretionary spending, the defense industrial base, including HII, and the customers, employees, suppliers, subcontractors, investors, and communities that rely on companies in the defense industrial base.