Huntington Ingalls Industries, Inc. (HII) Cash Flow Statement

The gap between net income and operating cash flow is the central signal here, with OCF/NI ratios ranging from -2.65 to 5.41 across the ten quarters. This pattern suggests that reported earnings are a poor proxy for cash generation on a quarterly basis, and that milestone billing and percentage-of-completion timing are driving most of the variance. Investors should monitor whether the multi-quarter average OCF/NI converges toward unity, which would indicate that the cash profile is catching up to earnings rather than merely oscillating around them.

Large swings in working capital consistently offset or amplify operating results, which is typical of long-cycle shipbuilding contracts where cash receipts depend on milestone achievement. The alternating pattern of large inflows and outflows suggests that cash conversion is lumpy rather than structurally impaired. Analysts should treat trailing four-quarter aggregates as a more reliable measure of underlying cash generation than any single period.

The extreme dispersion in FCF margins means that no single quarter is representative, and the two negative quarters in the recent sequence warrant scrutiny of whether they reflect timing or a deeper pressure on cash generation. Compared with the peer set, where most primes report FCF margins between roughly 8.8% and 10.6%, HII's cumulative trajectory over ten quarters appears weaker despite periodic strength. Investors should focus on whether the 2026Q3 FCF of $429M can be sustained.

Capex appears to be running near or somewhat above depreciation levels, with D&A holding steady near $75M to $87M per quarter, which suggests the company is maintaining its asset base rather than aggressively expanding it. The mix between maintenance and growth spending is not disclosed in the provided data, so the degree of discretionary investment cannot be confirmed. Investors should watch whether capex rises materially as throughput-improvement programs scale.