Shares of Huntington Ingalls Industries (HII) are surging 7.77% in pre-market trading on Thursday following the release of the company's second-quarter earnings report that exceeded analysts' expectations. The military shipbuilder reported earnings per share of $3.86, significantly beating the consensus estimate of $3.28.

Huntington Ingalls saw its revenue grow by 3.5% year-over-year to $3.1 billion, outpacing the projected $2.92 billion. The company's performance was bolstered by growth across its key segments, including Newport News Shipbuilding, Mission Technologies, and Ingalls Shipbuilding. Despite a slight decline in net earnings to $152 million from $173 million in the same quarter last year, investors appear encouraged by the company's solid top-line growth and operational improvements.

Adding to the positive sentiment, Huntington Ingalls secured new contract awards totaling $11.9 billion during the quarter, pushing its backlog to a record $56.9 billion. The company also increased its free cash flow guidance for fiscal year 2025 to between $500 million and $600 million, signaling confidence in its financial outlook. Furthermore, HII's strategic partnership with C3 AI to enhance digital technologies and implement artificial intelligence in shipbuilding processes suggests a forward-looking approach to improving operational efficiency.