What the changes say
- Contract exposure is quantified: 46% fixed-price incentive and 50% cost-type revenue, with inflation and labor shortages threatening margins.
- Talent risk emphasizes retirements, security clearances, and knowledge transfer across engineering, nuclear, trades, manufacturing, IT, and cybersecurity.
- AI risk now covers inaccurate or biased tools, liability, reputational damage, competition, and governance.
- Tax risk adds the 2025 Act’s bonus depreciation and domestic research-and-development deductions.
What changed since the prior 10-K
New
- NewBusiness and Operational Risk Factors
Our risk and ability to recover costs vary with the type of contract under which we are performing: firm fixed-price, fixed-price incentive, cost-type, or time and material
Contract profitability depends on pricing structure; fixed-price work may not recover inflation, wage, labor, supplier, or other cost increases.
- NewBusiness and Operational Risk Factors
Our business may be adversely affected if we are unable to attract, train, and retain qualified personnel
Retirements, attrition, scarce skills, and security-clearance requirements could leave HII without qualified engineering, nuclear, manufacturing, trades, IT, or cybersecurity personnel.
- NewBusiness and Operational Risk Factors
We utilize artificial intelligence, which could expose us to liability, as well as regulatory, competition, reputational, or other risks, or otherwise adversely affect our business
Deficient, inaccurate, biased, or controversial AI tools could create operational inefficiencies, competitive harm, legal liability, and reputational damage.
- NewLegal and Regulatory Risk Factors
Changes in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial results
Tax-law changes, including the 2025 Act’s bonus depreciation and domestic research-and-development deductions, could change tax expense, profitability, and cash flows.
Dropped
- DroppedBusiness and Operational Risk Factors
We depend on the recruitment and retention of qualified personnel, and challenges associated with our ability to attract, train and retain such personnel have harmed and may continue to negatively impact our business
- DroppedBusiness and Operational Risk Factors
We utilize artificial intelligence, which could expose us to liability or adversely affect our business, especially if we are unable to compete effectively with others in adopting artificial intelligence
- DroppedBusiness and Operational Risk Factors
We face risks related to health epidemics, pandemics, and similar outbreaks
- DroppedLegal and Regulatory Risk Factors
Water Act, the facility or facilities involved in the violation could be placed by the EPA on a list of facilities that generally cannot be used in performing on U.S. Government contracts until the violation is corrected
- DroppedLegal and Regulatory Risk Factors
We are subject to income and other taxes in the U.S. (federal and state) and foreign jurisdictions. Changes in applicable tax laws and regulations or their interpretation and application, including those with retroactive effect, have affected and could affect our tax expense and profitability and cash flows
- DroppedLegal and Regulatory Risk Factors
Our Restated Bylaws include an exclusive forum requirement for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for such disputes with us or our directors, officers, or employees
Reworded
- 93% rewrittenBusiness and Operational Risk Factors
Our business is subject to significant disruption from natural disasters, environmental disasters, and other events outside of our control that could have a material adverse effect on our financial position, results of operations, or cash flows
The risk broadens from storms, floods, climate impacts, and oil spills to include terrorism, pandemics, and disruptions to information technology and infrastructure.
Was: Our business is subject to disruptions caused by natural disasters, environmental disasters, and other events that could have a material adverse effect on our financial position, results of operations, or cash flows
- 88% rewrittenGeneral Risk Factors
We can provide no assurance we will pay dividends or repurchase shares of our common stock
The focus shifts from potential stockholders’ equity limits to uncertainty over dividends and repurchases, including restrictions if the government finds contract underperformance.
Was: We can provide no assurance we will continue to increase our dividends or repurchase shares of our common stock
- 80% rewrittenBusiness and Operational Risk Factors
Cost growth on flexibly priced contracts that does not result in higher contract prices reduces our profit and exposes us to the potential loss of future business
The discussion explicitly adds tariffs to cost-growth drivers, while retaining inflation, labor, supply, technical, funding, and performance risks.
Was: Cost growth on flexibly priced contracts that does not result in higher contract prices due from customers reduces our profit and exposes us to the potential loss of future business
- 79% rewrittenIndustry and Economic Risk Factors
We depend on the U.S. Government for substantially all of our business. Changes in the U.S. Government's priorities, strategies, spending, or other risks associated with conducting business with the U.S. Government could have a material adverse effect on our financial position, results of operations, or cash flows
The risk now emphasizes substantially all 2025 revenue coming from the U.S. Government and uncertainty around geopolitical, budget, procurement, and competition changes.
Was: We depend on the U.S. Government for substantially all of our business, and risks associated with conducting business with the U.S. Government could have a material adverse effect on our financial position, results of operations, or cash flows
- 67% rewrittenLegal and Regulatory Risk Factors
Our business and reputation may be adversely affected by the improper conduct of employees, agents, suppliers, subcontractors, business partners, or joint ventures in which we participate
The language now states HII has been affected by misconduct and adds antitrust, competition, and contract-term violations to the exposure.
Was: Our reputation and our ability to conduct business may be impacted by the improper conduct of employees, agents, suppliers, subcontractors or business partners
- 66% rewrittenLegal and Regulatory Risk Factors
Anti-takeover provisions in our organizational documents and Delaware law, as well as regulatory requirements, could delay or prevent a change in control
The risk adds U.S. Navy notice and approval requirements for potential changes of control involving nuclear shipbuilding operations.
- 56% rewrittenIndustry and Economic Risk Factors
Changes to the U.S. Government's business practices could have a material effect on its procurement, contracting, or other processes and practices and adversely affect our current programs and potential new awards
The risk newly highlights incentive fees, different award criteria, non-traditional provisions, and government cost mandates reducing profitability predictability.
Was: Changes to DoD business practices could have a material effect on DoD's procurement process and adversely impact our current programs and potential new awards
- 55% rewrittenGeneral Risk Factors
If we fail to manage acquisitions, joint ventures, equity investments, and other transactions successfully or if acquired businesses or equity investments fail to perform as expected, our financial results, business, and future prospects could be harmed
The scope expands to strategic partnerships and teaming arrangements, emphasizing transaction liabilities, management distraction, and substantial resource demands.
- 53% rewrittenIndustry and Economic Risk Factors
We have classified contracts with the U.S. Government, which limits investor insight into portions of our business
- 39% rewrittenIndustry and Economic Risk Factors
Competition within our markets and bid protests may affect our ability to win new contracts and result in reduced revenues or market share
Was: Competition within our markets or an increase in bid protests may reduce our revenues and market share
- 39% rewrittenGeneral Risk Factors
Market volatility and adverse capital market conditions may affect our ability to access cost-effective sources of funding
Was: Market volatility and adverse capital market conditions may affect our ability to access cost-effective sources of funding and may expose us to risks associated with the financial viability of suppliers and subcontractors
- 39% rewrittenIndustry and Economic Risk Factors
Significant delays or reductions in appropriations for our programs and/or changes in customer priorities could have a material adverse effect on our financial position, results of operations, or cash flows
- 38% rewrittenLegal and Regulatory Risk Factors
Environmental costs could have a material adverse effect on our financial position, results of operations, or cash flows
- 28% rewrittenBusiness and Operational Risk Factors
We could be negatively impacted by security threats, including cybersecurity threats, and related disruptions
Was: We could be negatively impacted by security threats, including cyber security threats, and related disruptions
- 23% rewrittenIndustry and Economic Risk Factors
Changes in estimates used in contract accounting and contract cost growth have affected and could continue to affect our profitability and our financial position
Was: Changes in estimates used in contract accounting and contract cost growth have affected and could continue to affect our profitability and our overall financial position
- 21% rewrittenBusiness and Operational Risk Factors
Changes in future business conditions could cause business investments, recorded goodwill, and/or purchased intangible assets to become impaired, resulting in losses and write-downs that would reduce our operating income
- 21% rewrittenBusiness and Operational Risk Factors
Our earnings and profitability depend, in part, upon subcontractor performance and raw material and component availability and pricing
All 29 risk factors
Headings as the filing states them, in filing order.
Industry and Economic Risk Factors
- 01We depend on the U.S. Government for substantially all of our business. Changes in the U.S. Government's priorities, strategies, spending, or other risks associated with conducting business with the U.S. Government could have a material adverse effect on our financial position, results of operations, or cash flows79% rewritten
- 02Significant delays or reductions in appropriations for our programs and/or changes in customer priorities could have a material adverse effect on our financial position, results of operations, or cash flows39% rewritten
- 03Changes in estimates used in contract accounting and contract cost growth have affected and could continue to affect our profitability and our financial position23% rewritten
- 04Changes to the U.S. Government's business practices could have a material effect on its procurement, contracting, or other processes and practices and adversely affect our current programs and potential new awards56% rewritten
- 05Competition within our markets and bid protests may affect our ability to win new contracts and result in reduced revenues or market share39% rewritten
- 06Our level of indebtedness and our ability to make payments on or service our indebtedness may adversely affect our financial and operating activities or our ability to incur additional debt
- 07We have classified contracts with the U.S. Government, which limits investor insight into portions of our business53% rewritten
Business and Operational Risk Factors
- 08Cost growth on flexibly priced contracts that does not result in higher contract prices reduces our profit and exposes us to the potential loss of future business80% rewritten
- 09Our risk and ability to recover costs vary with the type of contract under which we are performing: firm fixed-price, fixed-price incentive, cost-type, or time and materialNew
- 10Our business may be adversely affected if we are unable to attract, train, and retain qualified personnelNew
- 11Our earnings and profitability depend, in part, upon subcontractor performance and raw material and component availability and pricing21% rewritten
- 12Our success depends, in part, on our ability to increase our current and future shipbuilding capacity. If we are unable to do so, or to do so in a cost-effective manner, our business could be materially adversely affected
- 13We could be negatively impacted by security threats, including cybersecurity threats, and related disruptions28% rewritten
- 14We utilize artificial intelligence, which could expose us to liability, as well as regulatory, competition, reputational, or other risks, or otherwise adversely affect our businessNew
- 15Our business is subject to significant disruption from natural disasters, environmental disasters, and other events outside of our control that could have a material adverse effect on our financial position, results of operations, or cash flows93% rewritten
- 16Our business could be negatively impacted if we are unsuccessful negotiating new collective bargaining agreements
- 17Changes in future business conditions could cause business investments, recorded goodwill, and/or purchased intangible assets to become impaired, resulting in losses and write-downs that would reduce our operating income21% rewritten
Legal and Regulatory Risk Factors
- 18As a U.S. Government contractor, we are heavily regulated and could be adversely affected by changes in regulations or negative findings from a U.S. Government audit or investigation
- 19We are subject to investigations, claims, litigation, disputes and other legal proceedings that could ultimately be resolved against us
- 20Environmental costs could have a material adverse effect on our financial position, results of operations, or cash flows38% rewritten
- 21Our nuclear operations subject us to environmental, regulatory, financial, and other risks
- 22Our business and reputation may be adversely affected by the improper conduct of employees, agents, suppliers, subcontractors, business partners, or joint ventures in which we participate67% rewritten
- 23Changes in tax laws and regulations or exposure to additional tax liabilities could adversely affect our financial resultsNew
- 24We may be unable to adequately protect our intellectual property rights, which could affect our ability to compete
- 25Anti-takeover provisions in our organizational documents and Delaware law, as well as regulatory requirements, could delay or prevent a change in control66% rewritten
General Risk Factors
- 26Our insurance coverage may be inadequate to cover all of our significant risks or our insurers may deny coverage of material losses we incur, which could adversely affect our profitability and financial position
- 27We can provide no assurance we will pay dividends or repurchase shares of our common stock88% rewritten
- 28Market volatility and adverse capital market conditions may affect our ability to access cost-effective sources of funding39% rewritten
- 29If we fail to manage acquisitions, joint ventures, equity investments, and other transactions successfully or if acquired businesses or equity investments fail to perform as expected, our financial results, business, and future prospects could be harmed55% rewritten
Other Huntington Ingalls Industries 10-Ks
- FY2024 10-K risk factors32 risks
U.S. defense appropriations, DoD procurement changes, and customer priorities dominate HII’s risk profile.
Filed Feb 06, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.