10-QPeriod: Q1 FY2023

NORTHROP GRUMMAN CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 27, 2023For Securities:NOC

Summary

Northrop Grumman Corporation (NOC) reported its first-quarter 2023 results, with total sales increasing by 6% year-over-year to $9.30 billion. 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 million, 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 billion, indicating a healthy pipeline of future work.

Financial Highlights

49 data points
Beta

Revenue

$9.30B

Net Income

$842.00M

9.1% Net Margin

EPS (Diluted)

$5.50

Total Assets

$44.24B

Cash & Equivalents

$2.50B

Free Cash Flow

-$1.01B

Financial Statements
Beta
Revenue$9.30B
Operating Expenses$8.35B
Operating Income$947.00M
Net Income$842.00M
EPS (Basic)$5.52
EPS (Diluted)$5.50
Shares Outstanding (Basic)152.60M
Shares Outstanding (Diluted)153.20M

Key Highlights

  • 1Total sales increased by 6% to $9.30 billion in Q1 2023, driven by growth across multiple segments, particularly Space Systems.
  • 2Net earnings decreased by 12% to $842 million, primarily due to a reduced FAS pension benefit, despite a 6% increase in operating income.
  • 3Diluted earnings per share (EPS) decreased to $5.50 from $6.10 year-over-year.
  • 4The company issued $2.0 billion in unsecured senior notes in February 2023 to support general corporate purposes.
  • 5Share 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.
  • 6Backlog remains robust at $77.5 billion, providing visibility for future revenue.
  • 7Space Systems segment showed significant sales growth of 17%, driven by development programs like GBSD and NGI.

Frequently Asked Questions

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.

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.

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.

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.