Summary
Northrop Grumman Corporation (NOC) reported its first-quarter 2022 financial results, showing a significant year-over-year decrease in net earnings and diluted EPS, largely attributable to the absence of a large gain on sale of a business recorded in the prior year's quarter. Total sales decreased by 4% to $8.8 billion, primarily due to the continued impact of the IT services divestiture and softer volumes in certain segments. However, the company highlighted progress in key strategic areas, including increases in sales for the Space Systems segment driven by development programs like Next Generation Interceptor and GBSD. Despite the top-line decline and lower reported earnings, operational performance shows resilience with organic sales down only 2%. The company maintained its backlog at a robust $75.8 billion, indicating strong future revenue potential. Management is navigating ongoing supply chain challenges and labor market tightness, while also benefiting from increased defense spending driven by global geopolitical tensions. Key areas of investment and focus include autonomous systems, missile defense, and advanced weapons, aligning with national security priorities.
Financial Highlights
50 data points| Revenue | $8.80B |
| Operating Expenses | $7.90B |
| Operating Income | $897.00M |
| Net Income | $955.00M |
| EPS (Basic) | $6.12 |
| EPS (Diluted) | $6.10 |
| Shares Outstanding (Basic) | 156.00M |
| Shares Outstanding (Diluted) | 156.60M |
Key Highlights
- 1Total sales decreased 4% to $8.8 billion compared to $9.16 billion in Q1 2021, influenced by the prior year's IT services divestiture and lower volumes in Aeronautics and Defense Systems.
- 2Net earnings significantly decreased by 56% to $955 million ($6.10 per diluted share) from $2.195 billion ($13.43 per diluted share) in Q1 2021, primarily due to the absence of a $1.98 billion gain on sale of the IT services business in the prior year.
- 3Total backlog remained strong at $75.8 billion as of March 31, 2022, indicating substantial future revenue potential, with significant new awards in restricted programs, Commercial Resupply Service Missions, and Space Development Agency programs.
- 4Space Systems segment sales increased 13% to $2.85 billion, driven by growth in development programs such as the Next Generation Interceptor and Ground Based Strategic Deterrent (GBSD).
- 5Operating income margin decreased to 10.2% from 30.8% in the prior year, largely due to the absence of the significant gain on sale recorded in Q1 2021.
- 6The company's effective tax rate decreased to 16.5% from 27.2% primarily due to higher federal income taxes in the prior year related to the IT services divestiture.
- 7Adjusted free cash flow decreased to $(732) million from $(271) million in the prior year, primarily due to higher net cash used in operating activities and increased capital expenditures.