...The upgrade of Huntington Ingalls Industries Inc.'s (HII) ratings reflects the execution of a debt reduction plan that has resulted in EBITDA leverage sustained at around 2.0x. HII's ratings are further supported by the company's $48 billion order backlog and more than 70% of shipbuilding revenue under contract through 2027. Additionally, the US Navy's funded 30-year shipbuilding plan reduces cash flow risk and systematically improves diversification. The company also holds a strategically important position as the sole US industrial designer, builder, inactivator and refueler of nuclear-powered aircraft carriers, and one of only two companies capable of designing and building nuclear-powered submarines for the US Navy. Rating concerns include execution risk, program concentration and potential cash flow variability related to the timing of revenue generation and program development costs. Changes in Department of Defense (DoD) fleet planning needs could become a concern over time; however,...
