01—Abstract
Summary
Summary of the 10-K filed January 27, 2022. Cited figures are marked; the original filing is the authoritative source.
Northrop Grumman Corporation (NOC) reported total sales of $35.7 billiona for the fiscal year ended December 31, 2021, a slight decrease of 3% year-over-year, primarily driven by the divestiture of its IT and mission support services business.
Excluding this divestiture, organic sales grew by 3%, reaching $35.5 billionb, indicating underlying business growth. The company's strategic focus remains on national security priorities, with a significant portion of its revenue (85%) derived from the U.S. government. The company demonstrated strong operational performance with a 39% increase in operating income to $5.7 billion, largely influenced by a $2.0 billion pre-tax gain from the IT services divestiture.
Transaction-adjusted net earnings saw a 4% increase to $4.1 billionc, reflecting improved segment operating income and lower corporate expenses. Diluted Earnings Per Share (EPS) surged by 129% to $43.54, and transaction-adjusted EPS grew by 8% to $25.63, underscoring effective financial management and operational execution. Key growth drivers included the Space Systems segment, which experienced a 24% organic sales increase, and Mission Systems, with a 6% organic sales increase.
The company's backlog stood at $76.0 billiond at year-end 2021, providing a solid foundation for future revenue. Management also highlighted continued capital allocation to shareholders through share repurchases and dividend increases.
02—Key points
Key Highlights
- Total sales for fiscal year 2021 were $35.7 billion, a 3% decrease year-over-year, largely due to the divestiture of the IT and mission support services business.
- Organic sales grew 3% to $35.5 billion, demonstrating underlying business strength.
- Operating income significantly increased by 39% to $5.7 billion, bolstered by a $2.0 billion pre-tax gain from the IT services divestiture.
- Diluted EPS rose sharply by 129% to $43.54, reflecting the positive financial impact of divestiture and operational improvements.
- Space Systems segment saw strong organic sales growth of 24%, driven by new development programs.
- Mission Systems segment reported a 6% organic sales increase, supported by growth in airborne radar and maritime/land systems.
- Total backlog remained robust at $76.0 billion, indicating strong future revenue visibility.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed January 27, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $35.67B$36.80B | −3.1% |
| R&D Expenses | $1.10B$1.10B | 0.0% |
| Operating Expenses | $32.00B$32.73B | −2.3% |
| Operating Income | $5.65B$4.07B | +39.0% |
| Net Income | $7.00B$3.19B | +119.7% |
| EPS (Basic) | $43.70$19.08 | +129.0% |
| EPS (Diluted) | $43.54$19.03 | +128.8% |
| Shares Outstanding (Basic) | 160.30M167.10M | −4.1% |
| Shares Outstanding (Diluted) | 160.90M167.60M | −4.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of the sales decrease in 2021?
The primary driver of the 3% decrease in total sales for fiscal year 2021 was the divestiture of Northrop Grumman's IT and mission support services business, which reduced sales by $2.2 billion. However, the company's core operations showed growth, with organic sales increasing by 3%.
How did the IT services divestiture impact the company's financial performance?
The divestiture of the IT and mission support services business resulted in a pre-tax gain of $2.0 billion, significantly boosting operating income and net earnings for fiscal year 2021. While impacting reported sales, the divestiture allowed the company to focus on its core aerospace and defense segments.
Which segments performed strongest in terms of sales growth?
The Space Systems segment exhibited the strongest performance with a 24% organic sales increase, primarily due to ramp-ups in development programs like GBSD and NGI. The Mission Systems segment also showed positive growth with a 6% organic sales increase.
What is the significance of the company's backlog?
Northrop Grumman's total backlog stood at $76.0 billion at the end of 2021. This substantial backlog represents future contracted revenue and provides a strong indicator of the company's business visibility and stability, particularly given its reliance on long-term government contracts.
06—Continue