In This Article:
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Revenue: $9.5 billion, down 7% compared to the prior year.
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Backlog: Record backlog of $92.8 billion.
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B-21 Program Loss: $477 million pretax loss due to higher manufacturing costs.
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International Sales: 14% of total sales, with international sales up 11% in the quarter.
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Segment Operating Margin: 6% due to B-21 adjustment.
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Defense Systems Margin Rate: Improved to 9.9%.
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Space Segment Operating Margin: 11% with net favorable EACs of $29 million.
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EPS Impact: B-21 adjustment lowered EPS by $2.74 per share after-tax.
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Operating Cash Flow: Outflow of $1.5 billion.
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Capital Expenditures: Nearly $300 million invested.
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Shareholder Returns: Nearly $800 million returned through dividends and share repurchases.
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2025 Sales Guidance: $42 billion to $42.5 billion, representing 3% to 4% organic growth.
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Free Cash Flow Guidance: Reaffirmed at $2.85 billion to $3.25 billion.
Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Northrop Grumman Corp (NYSE:NOC) reported a record backlog of $92.8 billion in the first quarter, driven by strong international bookings.
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The company reaffirmed its 2025 financial guidance for sales and free cash flow, indicating confidence in achieving its outlook.
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Significant progress was made on key programs, including the successful static fire test of the Sentinel missile's Stage 1 solid rocket motor.
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Northrop Grumman Corp (NYSE:NOC) received a nearly $500 million contract for IBCS from the US Army, expanding software development and AI capabilities.
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International sales represented approximately 14% of total sales, with a first-quarter international book-to-bill ratio of 1.45 times, indicating strong growth potential.
Negative Points
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The company recognized a $477 million pretax loss related to the B-21 program due to higher manufacturing and material costs.
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First-quarter sales were down 7% compared to the prior year, impacted by contracting delays and timing of material receipts.
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The B-21 program's financial impact was disappointing, with a total loss provision of $477 million affecting the company's segment operating margin rate.
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There is uncertainty in the US defense budget environment, with delays in new awards affecting sales ramp-up.
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The macroeconomic environment and inflationary pressures have led to increased projected material costs, impacting profitability.
Q & A Highlights
Q: What milestones should we watch for to track the risk retirement of the B-21 program, and could there be further charges due to tariffs? A: Kathy J. Warden, CEO, explained that the B-21 program is completing the EMD phase and progressing through performance test milestones. The company has started low-rate initial production (LRIP) and is working through the first two lots. The manufacturing changes and associated costs are a result of scaling, and these learnings are now behind them. There is no change in the program's profile due to these updates, and the company is confident in its progress.