HII’s sea drone business is growing, but revenue is ‘modest,’ CEO says

The nation’s largest military shipbuilder sees maritime drones producing “modest” revenue now, but expects that to grow as the Navy builds its unmanned fleet, HII’s chief executive said during Thursday’s earnings call. 

“We know it’s going to become more of the Navy fleet because [unmanned systems] can do excess missions and expand the fleet size such that they can do things that large capital ships can’t do and take the place of large capital ships in some of the missions,” said Chris Kastner, HII’s CEO and president. “From a revenue standpoint right now, it’s pretty modest.” 

Kastner went on to say that HII’s unmanned business, which is part of the Mission Technologies division, is growing quickly. Earlier this month, the Navy extended its Lionfish unmanned undersea contract that was originally awarded in 2023 for nearly $350 million. 

“I don’t really want to comment on how large it’s going to be, but I’ll tell you one thing—it’s the fastest-growing business unit we have,” Kastner said, adding that the company is competing for the Navy’s medium unmanned surface vehicle program.

“The international and domestic pipeline is strong, we’re going to pursue those…It’s a good business unit. It’s a growing business unit. The profitability should be solid because it’s firm fixed-price contracts. We think we’re very competitive, and we’re going to continue to invest in it and watch it grow. Now, is it going to be a billion-dollar battleship? No. We think it’s going to grow. We think there’s significant opportunity, and we think it’s going to be a greater part of the fleet.”

Sea drones have become increasingly visible on the battlefield as navies use them for surveillance, rescues, and kinetic strikes. And more companies have entered the sector as the Navy boosts its unmanned systems budget and homes in on how it wants to integrate them into its fleet—while pushing companies to grow the capacity to build them quickly.

HII has emphasized its tech business more in recent years, often stressing the segment’s poised growth. Mission Technologies had $760 million in second-quarter revenue this year, an approximate $31 million and nearly 4 percent drop compared to last year. 

That’s “primarily due to lower volumes in all domain operations in global security, partially offset by higher volumes in warfare systems and unmanned systems,” Tom Stiehle, HII’s chief financial officer and executive vice president, said during Thursday’s call. 

The Mission Technologies business is expected to grow about 5 percent in the next five years and generate up to $3.2 billion in revenue for fiscal year 2026, according to the company’s earnings update.