10-QPeriod: Q2 FY2025

NORTHROP GRUMMAN CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2025

Filed July 22, 2025For Securities:NOC

Summary

Northrop Grumman Corporation reported a solid increase in sales for the second quarter of 2025, reaching $10.35 billion, up 1% year-over-year, driven by growth in Mission Systems, Defense Systems, and Aeronautics Systems. While total sales for the six months ended June 30, 2025, saw a slight decrease of 3% to $19.82 billion, this was primarily attributed to the wind-down of certain space programs. Net earnings for the quarter showed a significant 25% increase to $1.17 billion, or $8.15 per diluted share, benefiting from a $231 million pre-tax gain on the sale of its training services business and improved operational performance across segments. However, for the first half of the year, net earnings decreased by 12% to $1.66 billion, largely impacted by a $477 million loss provision on the B-21 program in the first quarter. The company's backlog remains robust at $89.7 billion as of June 30, 2025, providing visibility into future revenues. Despite a challenging operating environment marked by geopolitical instability and economic pressures, Northrop Grumman's strategic positioning and operational execution, including a favorable EAC adjustment on the Sentinel program, demonstrate resilience.

Financial Highlights

51 data points
Beta

Revenue

$10.35B

Net Income

$1.17B

11.3% Net Margin

EPS (Diluted)

$8.15

Total Assets

$49.45B

Cash & Equivalents

$1.90B

Free Cash Flow

$637.00M

Financial Statements
Beta
Revenue$10.35B
Operating Expenses$9.16B
Operating Income$1.43B
Net Income$1.17B
EPS (Basic)$8.17
EPS (Diluted)$8.15
Shares Outstanding (Basic)143.70M
Shares Outstanding (Diluted)144.00M

Key Highlights

  • 1Total sales for Q2 2025 increased by 1% to $10.35 billion, driven by growth in Mission Systems, Defense Systems, and Aeronautics Systems.
  • 2Net earnings for Q2 2025 surged by 25% to $1.17 billion ($8.15 per diluted share), boosted by a $231 million gain from the sale of the training services business.
  • 3A $477 million loss provision for the B-21 program in Q1 2025 negatively impacted the six-month net earnings, contributing to a 12% year-over-year decrease to $1.66 billion.
  • 4The company reported a strong backlog of $89.7 billion as of June 30, 2025, indicating significant future revenue potential.
  • 5Operating income for Q2 2025 increased by 31% to $1.425 billion, largely due to the gain on sale and improved segment performance.
  • 6The company received a $76 million favorable EAC adjustment on the Sentinel program's EMD phase, reflecting improved expectations for contract incentives.
  • 7Cash used in operating activities for the first six months of 2025 was $697 million, compared to $719 million provided in the prior year, primarily due to higher tax payments and increased working capital needs.

Frequently Asked Questions

The primary driver for the increase in net earnings in the second quarter of 2025 was a pre-tax gain of $231 million recognized from the sale of the company's training services business. This was supplemented by improved segment operating income and higher sales in key segments.

The B-21 program continues to be a significant factor. In the first quarter of 2025, the company recorded an additional $477 million loss provision on the program's low-rate initial production (LRIP) phase. While no significant changes were made in Q2 2025, this provision has negatively impacted the year-to-date net earnings.

The Sentinel program was certified for continuation and is undergoing restructuring. In the second quarter of 2025, Northrop Grumman recognized a $76 million favorable Estimate At Completion (EAC) adjustment, primarily related to the expectation of achieving certain contract incentives within the EMD phase.

For the first six months of 2025, net cash used in operating activities was $697 million, a change from the prior year's net cash provided. This was largely due to higher net cash tax payments, including the prior year's receipt of a federal tax refund, and increased trade working capital. Free cash flow for the period was negative at $(1.184) billion, reflecting these operating cash flow challenges and capital expenditures.