| • Net awards of $11.7 billion; record backlog of $85 billion |
| • Q3 sales of $10.0 billion; year to date sales up 6 percent |
| • Operating margin rate of 11.2 percent; segment operating margin rate1 of 11.5 percent |
| • Diluted earnings per share increased 13 percent to $7.00 |
| • Company raises lower end of 2024 segment operating income1 guidance and increases MTM-adjusted EPS1 guidance by 75 cents to $25.65 - $26.05 |
| Northrop Grumman Corporation (NYSE: NOC) reported that third-quarter 2024 sales increased 2 percent to $10.0 billion, as compared with $9.8 billion in the third quarter of 2023. Third quarter 2024 sales reflect continued strong demand for our products and services. The third quarter of 2024 net earnings totalled $1.0 billion, or $7.00 per diluted share, as compared with $937 million, or $6.18 per diluted share, in the third quarter of 2023. |
| “Based on the strength of our year-to-date results and our positive outlook for the future, we are once again raising our 2024 guidance. Sales remain on target for 5% growth this year and the deliberate actions we are taking to improve margin rates have resulted in further expansion this quarter,” said Kathy Warden, chair, chief executive officer and president. “With our investments to create capacity and focus on performance, we continue to deliver value for our customers and our shareholders. As we look toward 2025, our outlook includes continued top-line growth, margin rate expansion and greater than 20% free cash flow growth.” |
| Consolidated Operating Results and Cash Flows |
- Three Months Ended Nine Months Ended
|
- September 30 September 30
|
| |
|
|
|
|
|
|
| $ in millions, except per share amounts |
2024 |
2023 |
Change |
2024 |
2023 |
Change |
| Sales |
|
|
|
|
|
|
| Aeronautics Systems |
$ 2,878 |
$ 2,766 |
4% |
$ 8,810 |
$ 7,876 |
12% |
| Defense Systems |
2,084 |
2,050 |
2% |
6,227 |
6,058 |
3% |
| Mission Systems |
2,823 |
2,628 |
7% |
8,255 |
7,832 |
5% |
| Space Systems |
2,870 |
2,953 |
(3%) |
9,021 |
8,775 |
3% |
| Intersegment eliminations |
(659) |
(622) |
|
(1,966) |
(1,889) |
|
| Total sales |
9,996 |
9,775 |
2% |
30,347 |
28,652 |
6% |
| Operating income |
|
|
|
|
|
|
| Aeronautics Systems |
298 |
283 |
5% |
890 |
798 |
12% |
| Defense Systems |
196 |
201 |
(2%) |
614 |
605 |
1% |
| Mission Systems |
390 |
386 |
1% |
1,129 |
1,147 |
(2%) |
| Space Systems |
345 |
302 |
14% |
979 |
840 |
17% |
| Intersegment eliminations |
(83) |
(83) |
|
(261) |
(247) |
|
| Segment operating income1 |
1,146 |
1,089 |
5% |
3,351 |
3,143 |
7% |
| Segment operating margin rate |
11.5% |
11.1% |
40 bps |
11.0% |
11.0% |
— bps |
| FAS/CAS operating adjustment |
20 |
(20) |
NM |
32 |
(62) |
NM |
| Unallocated corporate expense: |
|
|
|
|
|
|
| Intangible asset amortization and PP&E step-up depreciation |
(23) |
(31) |
(26%) |
(72) |
(92) |
(22%) |
| Other unallocated corporate expense |
(23) |
(22) |
5% |
(30) |
(59) |
(49%) |
| Unallocated corporate expense |
(46) |
(53) |
(13%) |
(102) |
(151) |
(32%) |
| Total operating income |
$ 1,120 |
$ 1,016 |
10% |
$ 3,281 |
$ 2,930 |
12% |
| Operating margin rate |
11.2% |
10.4% |
80 bps |
10.8% |
10.2% |
60 bps |
| Interest expense |
(161) |
(141) |
14% |
(461) |
(417) |
11% |
| Non-operating FAS pension benefit |
168 |
132 |
27% |
503 |
397 |
27% |
| Other, net |
61 |
111 |
(45%) |
142 |
193 |
(26%) |
| Earnings before income taxes |
1,188 |
1,118 |
6% |
3,465 |
3,103 |
12% |
| Federal and foreign income tax expense |
162 |
181 |
(10%) |
555 |
512 |
8% |
| Effective income tax rate |
13.6% |
16.2% |
(260) bps |
16.0% |
16.5% |
(50) bps |
| Net earnings |
$ 1,026 |
$ 937 |
9% |
$ 2,910 |
$ 2,591 |
12% |
| Diluted earnings per share |
7.00 |
6.18 |
13% |
19.69 |
17.00 |
16% |
| Weighted-average diluted shares outstanding, in millions. |
146.5 |
151.7 |
(3%) |
147.8 |
152.4 |
(3%) |
| Net cash provided by operating activities |
$ 1,091 |
$ 1,228 |
(11%) |
$ 1,810 |
$ 1,445 |
25% |
| Capital expenditures |
(361) |
(359) |
1% |
(951) |
(972) |
(2%) |
| Free cash flow1 |
$ 730 |
$ 869 |
(16%) |
$ 859 |
$ 473 |
82% |
|
| Sales |
| Third quarter 2024 sales increased $221 million, or 2 percent, due to higher sales at Mission Systems, Aeronautics Systems and Defense Systems, partially offset by lower sales at Space Systems largely driven by a reduction of $224 million associated with wind-down of our work on the restricted space and NGI programs, as previously disclosed. Third quarter 2024 sales reflect continued strong demand for our products and services. |
| Operating Income and Margin Rate |
| Third quarter 2024 operating income increased $104 million, or 10 percent, primarily due to |
| $57 million of higher segment operating income1 and a $40 million increase in the FAS/CAS operating adjustment. The operating margin rate increased to 11.2 percent from 10.4 percent primarily due to benefits associated with the FAS/CAS operating adjustment and a higher segment operating margin rate1. |
| Segment Operating Income and Margin Rate1 |
| Third quarter of 2024 segment operating income increased $57 million, or 5 percent, primarily due to a higher segment operating margin rate1 and higher sales. Segment operating margin rate1 increased to 11.5 percent and reflects higher operating margin rates at Space Systems and Aeronautics Systems, partially offset by lower operating margin rates at Mission Systems and Defense Systems. |
| Federal and Foreign Income Taxes |
| The company’s third quarter 2024 effective tax rate (ETR) decreased to 13.6 percent from |
| 16.2 percent in the prior year period principally driven by a net reduction in tax reserves largely due to a recent federal court decision, partially offset by higher interest expense on unrecognized tax benefits. |
| Net Earnings and Diluted EPS |
| Third quarter 2024 net earnings increased $89 million, or 9 percent, primarily due to $104 million of higher operating income, a $36 million increase in the non-operating FAS pension benefit and a lower effective tax rate, partially offset by a $97 million gain recognized in the prior year upon the sale of a minority investment. Third quarter 2024 diluted earnings per share increased 13 percent, reflecting a 9 percent increase in net earnings and a 3 percent reduction in weighted-average diluted shares outstanding. |
| Cash Flows |
| Third quarter 2024 cash provided by operating activities decreased $137 million and third quarter 2024 free cash flow1 decreased $139 million principally due to higher net federal tax payments. |
| Awards and Backlog |
| Third quarter 2024 net awards totalled $11.7 billion and backlog totalled $84.8 billion. |
| Significant third-quarter new awards include $2.7 billion for restricted programs (primarily at Mission Systems, Aeronautics Systems, and Space Systems), $1.6 billion for E-2 and $0.7 billion for certain military ammunition programs. |
| For the full document click the link below: |
| Northrop Grumman Corporation |
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