Jan 25 (Reuters) - Northrop Grumman NOC.N said on Thursday it posted a fourth-quarter loss after turning a profit a year earlier as it booked $1.17 billion in costs related to the U.S. Air Force's next-generation B-21 stealth bomber .
Shares of the Falls Church, Virginia-based company, which lost around 15% of its value in 2023, were down 6.2% in New York.
The B-21 Raider began flight tests in the fourth quarter, after which the US Air Force awarded Northrop a low-rate initial production (LRIP) contract for the bomber on a fixed-price basis.
"We believe it is likely that each of the first five LRIP lots will be conducted at a loss," Northrop said. The number of aircraft in those lots is unknown.
However, most of the production of the B-21 program, which will eventually produce more than 100 bombers, is covered by a cost-plus contract, meaning the company will reimburse the company for any additional costs it incurs due to inflation.
The B-21 Raider, which replaces the aging B-2, is a key weapon in the Pentagon's strategy to combat China.
According to LSEG data, Northrop reported adjusted free cash flow of $1.63 billion for the fourth quarter, above Wall Street analysts' estimates of $1.58 billion.
"We generated free cash flow at the high end of our guidance range, significantly exceeded our revenue guidance and beat EPS consensus, excluding the B-21 charge that we identified as a possibility this time last year," Chief Executive Kathy Warden said in a statement .
While the B-21 manufacturer Aeronautics experienced a 44% decline in operating margin, the continued expansion of development programs, primarily the Ground Based Strategic Deterrent (GBSD), increased margin in the Space Systems business by 12%.
The Sentinel program managed by Northrop Grumman, which is intended to replace Minuteman nuclear missiles, has used up its budget of USD 95.8 billion, the US Air Force announced last week.
Northrop reported a fourth-quarter loss of $3.54 per diluted share, compared with a profit of $5.96 per diluted share a year ago. Total revenue increased 6% to $10.6 billion.
Despite the B-21 headwinds, Northrop forecast 2024 revenue between $40.8 billion and $41.2 billion. Analyst estimates of USD 41.14 billion are slightly below the upper end of Northrop's forecast.
