Northrop Grumman Corporation (NOC - Free Report)
Reported adjusted earnings of USD 6.06 per share for the first quarter of 2025, missing the consensus estimate of USD 6.21 by 2.4%.
Including the one-time impact of the B-21 LRIP loss provision, the company reported GAAP earnings of $3.32 per share, down from $6.32 in the year-ago quarter.
The year-over-year decline is due to a pre-tax loss incurred by Northrop Grumman in the first quarter. This was due to higher manufacturing costs, primarily due to a process change to accelerate production, as well as increased forecasted costs and volumes for general procurement materials.
NOC's total revenue
NOC's total revenue of $9.47 billion in the first quarter missed the consensus estimate of $9.91 billion by 4.4%. Sales also fell by 6.6% compared to the same quarter last year (USD 10.13 billion). This decline is attributable to lower sales in the Aerospace Systems and Space Systems segments.
Northrop Grumman's order backlog
The company's total backlog at the end of the first quarter was $92.80 billion, compared to $91.47 billion at the end of the fourth quarter of 2024.
NOC's Aerospace Systems segment details:
This segment's revenue of $2.81 billion decreased by 7.6% compared to the prior year. This is due to lower revenue from B-21 and other constrained programs and a decrease in maintenance volume for the F-35 due in part to material availability.
The division's operating loss amounted to USD 183 million in the first quarter of 2024 compared to an operating profit of USD 306 million. The operating profit margin also deteriorated from 10.1% to an operating loss margin of 6.5%. Mission Systems: Sales in this segment increased by 5.6% to USD 2.81 billion. This was due to higher sales from the SABR (Scalable Agile Beam Radar) program, the expansion of programs for electronic self-protection and international ground-based radar systems as well as a higher volume of naval systems programs.
The unit's operating result fell by 4.5% to USD 361 million.
The operating margin decreased by 130 basis points to 12.9%. Defense Systems: Sales in this segment increased by 3.9% year-on-year to USD 1.81 billion. The improvement is attributable to the further expansion of the Sentinel program and the higher volume of certain military ammunition programs. The unit's operating result improved by 14.7% year-on-year to USD 179 million.
The operating margin increased by 90 basis points to 9.9%.
Space Systems:
Sales in this segment fell by 18.5% to USD 2.57 billion. This is due to the discontinuation of work on the Constrained Space and NGI programs as well as lower volumes in Commercial Resupply Services (CRS), Space Development Agency (SDA) satellite programs and other constrained space programs.
The segment's operating profit fell by 14.2% year-on-year to USD 283 million. However, the operating margin increased by 50 basis points to 11%. Northrop Grumman's Operating Update Total operating income for the quarter was $573 million, a significant decrease from $1,071 million in the prior year quarter.
This decline was due to lower operating results in Aerospace Systems, Mission Systems and Space Systems.
NOC's financial position
Northrop Grumman's cash and cash equivalents were $1.69 billion as of March 31, 2025, compared to $4.35 billion as of December 31, 2024.
Long-term debt (net of current portion) was $14.17 billion compared to $14.69 billion as of December 31, 2024.
Net cash flow from operating activities amounted to USD 1.57 billion in the first three months of 2025 compared to USD 0.71 billion in the previous year.
Northrop Grumman's forecast for 2025
The company partially reaffirmed its 2025 guidance, continuing to expect revenue in the range of $42.00 billion to $42.50 billion. The consensus estimate for revenue is $42.27 billion, above the midpoint of the company's guidance.
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NOC now expects adjusted earnings of between 24.95 and 25.35 US dollars per share, below the previously forecast range of 27.85 to 28.25 US dollars.
The consensus earnings estimate is $28.08 per share, above the company's new guidance.
Northrop Grumman continues to expect adjusted free cash flow between $2.85 billion and $3.25 billion. $NOC (-2,66%)