01—Abstract
Summary
Summary of the 10-Q filed April 27, 2023. Cited figures are marked; the original filing is the authoritative source.
Northrop Grumman Corporation (NOC) reported its first-quarter 2023 results, with total sales increasing by 6% year-over-year to $9.30 billiona.
This growth was primarily driven by strong performance in Space Systems, Defense Systems, and Mission Systems, partially offset by a decline in Aeronautics Systems. Net earnings for the quarter decreased by 12% to $842 millionb, or $5.50 per diluted share, compared to $955 million, or $6.10 per diluted share, in the prior year. This decline was largely due to a significant reduction in the non-operating FAS pension benefit and higher operating costs.
Despite the decrease in net earnings, the company's operating income saw a 6% increase, and the company continues to manage its capital effectively, including substantial share repurchases and dividend payments. The company's backlog remains strong at $77.5 billionc, indicating a healthy pipeline of future work.
02—Key points
Key Highlights
- Total sales increased by 6% to $9.30 billion in Q1 2023, driven by growth across multiple segments, particularly Space Systems.
- Net earnings decreased by 12% to $842 million, primarily due to a reduced FAS pension benefit, despite a 6% increase in operating income.
- Diluted earnings per share (EPS) decreased to $5.50 from $6.10 year-over-year.
- The company issued $2.0 billion in unsecured senior notes in February 2023 to support general corporate purposes.
- Share repurchases and dividends continue to be a focus, with the company repurchasing approximately $0.72 billion in common stock and paying $0.27 billion in dividends during the quarter.
- Backlog remains robust at $77.5 billion, providing visibility for future revenue.
- Space Systems segment showed significant sales growth of 17%, driven by development programs like GBSD and NGI.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2023filed April 27, 2023Financial Statements
Q1 FY2023 against Q1 FY2022
| Line item | Q1 FY2023Q1 FY2022 | Change |
|---|---|---|
| Revenue | $9.30B$8.80B | +5.7% |
| Operating Expenses | $8.35B$7.90B | +5.7% |
| Operating Income | $947.00M$897.00M | +5.6% |
| Net Income | $842.00M$955.00M | −11.8% |
| EPS (Basic) | $5.52$6.12 | −9.8% |
| EPS (Diluted) | $5.50$6.10 | −9.8% |
| Shares Outstanding (Basic) | 152.60M156.00M | −2.2% |
| Shares Outstanding (Diluted) | 153.20M156.60M | −2.2% |
05—Questions
Frequently Asked Questions
What drove the increase in sales for Northrop Grumman in Q1 2023?
Sales increased by 6% to $9.30 billion primarily due to higher sales in the Space Systems segment (up 17%), driven by development programs like GBSD and NGI, as well as strong performance in Defense Systems and Mission Systems. This growth was partially offset by lower sales in the Aeronautics Systems segment.
Why did net earnings and EPS decrease year-over-year?
Net earnings decreased by 12% to $842 million, and diluted EPS fell to $5.50 from $6.10. This was mainly due to a significant reduction in the non-operating FAS pension benefit ($244 million decrease) compared to the prior year. While operating income increased, other factors like a lower effective tax rate and increased returns on marketable securities partially offset the earnings decline.
How is the company managing its capital and returning value to shareholders?
Northrop Grumman continues to prioritize capital allocation. During Q1 2023, the company repurchased approximately $723 million of its common stock and paid out $270 million in dividends. Additionally, the company issued $2.0 billion in senior notes in February 2023, intended for general corporate purposes, including potential debt repayment and share repurchases.
What is the significance of the company's backlog?
The company's backlog stood at $77.5 billion as of March 31, 2023. This substantial backlog represents future sales from firm orders and provides strong visibility into the company's revenue streams for the coming quarters and years, indicating continued demand for its products and services.
06—Continue