Financial Data and Key Metrics Changes - First quarter sales were $9.5 billion, down 7% compared to the prior year, impacted by fewer working days and contracting delays [27][28] - The company recognized an additional $477 million pre-tax loss related to the B21 program, affecting the overall segment operating margin rate, which dropped to 6% [9][32] - Earnings per share were lower primarily due to the B21 adjustment, totaling $2.74 per share on an after-tax basis [36] Business Line Data and Key Metrics Changes - Aeronautics sales decreased by 8% year-over-year due to lower B-21 sales and production timing on mature programs like F-35 [29] - Defense Systems (DS) first quarter sales increased by $68 million, or 4%, driven by the Sentinel program and military ammunition [30] - Mission Systems sales grew by $148 million, or 6%, due to various programs including SABR and international ground-based radar [30] - Space sales were lower primarily due to the wind down of two programs, totaling approximately $230 million in year-over-year headwinds [31] Market Data and Key Metrics Changes - International sales represented approximately 14% of total sales, with international sales up 11% in the quarter [20] - The first quarter international book-to-bill ratio was 1.45 times, indicating strong demand for international bookings [20] - Poland signed a $745 million letter of acceptance for 200 ARGM-ER missiles, contributing to growth potential [21] Company Strategy and Development Direction - The company aims to compete in global markets through technology differentiation and has invested $13.5 billion in R&D and infrastructure over the last five years [22] - The strategy includes leveraging hardware and software capabilities to develop next-generation systems and partnering with leading companies in AI [24] - The company is focused on driving innovation, expanding market presence, and optimizing performance for sustainable growth [25] Management's Comments on Operating Environment and Future Outlook - The management noted strong demand signals from global customers, resulting in a record backlog of $92.8 billion [7] - The U.S. defense budget environment is evolving, with expectations of increased defense spending due to a finalized continuing resolution [16][17] - The administration's fiscal year 2026 budget request is expected to maintain strong commitment to national security funding [18] Other Important Information - The company expects mid-single-digit organic growth in 2025 sales, reaffirming guidance of $42 billion to $42.5 billion [39] - The divestiture of the training service business is on track to close mid-year [41] - The company anticipates a gradual ramp in overall segment margin rates driven by strong program performance and cost-saving initiatives [44] Q&A Session Summary Question: What milestones should be watched for the B21 program? - Management discussed the completion of the EMD phase and ongoing tests to prove aircraft performance, with low-rate initial production underway [48][49] Question: What gives confidence that the situation with U.S. customers will improve? - Management noted that award decisions are starting to move forward, expecting improvements in the second quarter and throughout the year [61][64] Question: What is the anticipated cash impact from the B21 EAC adjustment? - The cash impact will be spread primarily through 2026, 2027, and 2028, with no material impact expected for 2025 [66] Question: How confident should investors feel about the profitability of the Sentinel program? - Management expressed confidence in the design and restructuring of the program, which is cost-plus, and noted that they are working with the Air Force to reduce costs [76] Question: How does the company view the impact of tariffs on its portfolio? - Management indicated that tariffs impact a small part of the supply chain and most costs are covered under contracts with the U.S. government, posing no significant risk [82][83] Question: What is the outlook for international sales growth? - Management expects continued growth in international sales, driven by a significant pipeline of demand and various programs [141][144]

Core Viewpoint - Northrop Grumman Corporation (NOC) reported disappointing first-quarter 2025 financial results, with adjusted earnings and total sales missing consensus estimates, primarily due to increased manufacturing costs and lower sales in key segments [1][3][2]. Financial Performance - Adjusted earnings for Q1 2025 were $6.06 per share, missing the Zacks Consensus Estimate of $6.21 by 2.4% [1] - GAAP earnings were reported at $3.32 per share, down from $6.32 in the same quarter last year [1] - Total sales amounted to $9.47 billion, falling short of the Zacks Consensus Estimate of $9.91 billion by 4.4% and declining 6.6% from $10.13 billion year-over-year [3] Segment Performance - **Aeronautics Systems**: Sales decreased 7.6% to $2.81 billion, with an operating loss of $183 million compared to an operating income of $306 million in Q1 2024 [5] - **Mission Systems**: Sales increased 5.6% to $2.81 billion, but operating income decreased 4.5% to $361 million [6] - **Defense Systems**: Sales rose 3.9% to $1.81 billion, with operating income improving 14.7% to $179 million [7] - **Space Systems**: Sales declined 18.5% to $2.57 billion, with operating income decreasing 14.2% to $283 million [8] Operational Metrics - Total operating income for the quarter was $573 million, significantly down from $1,071 million in the prior-year quarter [10] - The company's total backlog increased to $92.80 billion from $91.47 billion at the end of Q4 2024 [4] Financial Condition - Cash and cash equivalents as of March 31, 2025, were $1.69 billion, down from $4.35 billion at the end of 2024 [11] - Long-term debt decreased to $14.17 billion from $14.69 billion [11] - Net cash outflow from operating activities was $1.57 billion, compared to $0.71 billion a year ago [11] Guidance - Northrop Grumman expects revenues for 2025 to be in the range of $42.00-$42.50 billion, with a consensus estimate of $42.27 billion [12] - Adjusted earnings guidance was lowered to a range of $24.95-$25.35 per share, down from the previous guidance of $27.85-$28.25 [13] - The company still projects adjusted free cash flow between $2.85-$3.25 billion [13]

Core Viewpoint - Northrop Grumman's stock experienced significant sell-offs following disappointing first-quarter results, with a notable decline in share price despite a positive market backdrop [1][2]. Financial Performance - The company reported earnings per share (EPS) of $6.06 on sales of $9.47 billion, missing analyst expectations of $6.26 EPS and $9.94 billion in sales [3]. - Revenue decreased by 7% year-over-year, attributed to weaker performance in space systems and aeronautics systems [3]. Segment Performance - Defense systems sales increased by 4%, driven by products like the Sentinel intercontinental ballistic missile, while the aeronautics segment saw an 8% decline due to reduced demand for the B-21 bomber [4]. - The space segment experienced an 18% drop in sales compared to the previous year, linked to lower demand for classified projects and next-generation missile initiatives [4]. Future Guidance - Management maintained its full-year sales guidance between $42 billion and $42.5 billion and free cash flow between $2.85 billion and $3.25 billion, but lowered EPS expectations to a range of $24.95 to $25.35, down from $27.85 to $28.25 [5]. - The performance shortfall and reduced earnings outlook have led investors to reassess the company's narrative, particularly regarding its position in the space industry [6].

Core Insights - Northrop Grumman reported $9.47 billion in revenue for Q1 2025, a year-over-year decline of 6.6% and below the Zacks Consensus Estimate of $9.91 billion, resulting in a surprise of -4.44% [1] - The company's EPS for the same period was $6.06, down from $6.32 a year ago, with an EPS surprise of -2.42% compared to the consensus estimate of $6.21 [1] Financial Performance Metrics - Mission Systems sales were $2.81 billion, exceeding the six-analyst average estimate of $2.75 billion, reflecting a year-over-year increase of 5.6% [4] - Aeronautics Systems sales were $2.81 billion, below the average estimate of $3.14 billion, showing a year-over-year decline of 5.2% [4] - Space Systems sales were $2.57 billion, under the average estimate of $2.66 billion, representing a significant year-over-year decrease of 29.7% [4] - Defense Systems sales reached $1.81 billion, slightly below the average estimate of $1.88 billion, but showing a year-over-year increase of 27.8% [4] - Intersegment eliminations reported sales of -$526 million, slightly worse than the average estimate of -$517.83 million, marking a year-over-year decline of 6.4% [4] Operating Income Analysis - Operating income for Mission Systems was $361 million, compared to the average estimate of $394.99 million [4] - Defense Systems operating income was $179 million, slightly below the average estimate of $181.90 million [4] - Aeronautics Systems reported an operating loss of -$183 million, significantly worse than the average estimate of $301.39 million [4] - Space Systems operating income was $283 million, close to the average estimate of $286.83 million [4] - Unallocated corporate expenses were -$58 million, better than the average estimate of -$63.32 million [4]

Core Viewpoint - Northrop Grumman Corporation has released its first quarter 2025 financial results, indicating ongoing performance in the aerospace and defense sector [1]. Group 1: Financial Results - The financial results for the first quarter of 2025 have been made available through the company's Form 8-K filing and on its investor relations website [1]. - A webcast of the earnings conference call is scheduled for 9:30 a.m. Eastern time, providing further insights into the financial performance [2]. Group 2: Company Overview - Northrop Grumman is recognized as a leading global aerospace and defense technology company, focusing on providing innovative solutions to meet customer needs [3]. - The company emphasizes its commitment to solving complex problems for its customers and advancing human exploration [3].

Financial Performance - First quarter 2025 sales decreased by $665 million, or 7%, to $9.5 billion compared to $10.1 billion in the first quarter of 2024[6] - Net earnings for the first quarter 2025 totaled $481 million, or $3.32 per diluted share, down from $944 million, or $6.32 per diluted share, in the same period last year, reflecting a 49% decrease[2] - Operating income decreased by $498 million, or 46%, to $573 million, with an operating margin rate declining to 6.1% from 10.6%[7] - Total sales for the three months ended March 31, 2025, were $9,468 million, compared to $10,133 million for the same period in 2024, reflecting a decrease of approximately 6.6%[41] - Operating income for the three months ended March 31, 2025, was $573 million, down from $1,071 million in the same period of 2024, representing a decline of about 46.6%[41] - Net earnings for the three months ended March 31, 2025, were $481 million, compared to $944 million in 2024, indicating a decrease of approximately 49.1%[41] - Basic earnings per share for the three months ended March 31, 2025, were $3.33, down from $6.34 in the same period of 2024[41] Cash Flow and Capital Expenditures - Cash from operating activities decreased by $859 million, or 122%, resulting in a free cash flow decline of $845 million, or 87%[11] - Net cash used in operating activities was $1,565 million, significantly higher than $706 million in the prior year[47] - Capital expenditures for the quarter were $256 million, slightly lower than $270 million in the same quarter of 2024[47] - Common stock repurchases amounted to $480 million, a decrease from $1,190 million in the prior year[47] - Free cash flow is calculated as net cash provided by or used in operating activities less capital expenditures[66] - Free cash flow is a key factor for planning acquisitions, dividend payments, and stock repurchases[66] - Free cash flow should not be considered in isolation as a measure of residual cash flow available for discretionary purposes[66] - The company emphasizes the importance of free cash flow as a supplemental measure of cash performance for investors[66] Segment Performance - Sales in the Aeronautics Systems segment decreased by $230 million, or 8%, primarily due to lower sales on the B-21 program[16] - Defense Systems segment sales increased by $68 million, or 4%, driven by the ramp-up on the Sentinel program[19] - Mission Systems segment sales rose by $148 million, or 6%, attributed to higher sales on the Scalable Agile Beam Radar program[22] - Space Systems segment sales fell by $581 million, or 18%, primarily due to the wind-down of work on certain restricted space programs[25] Guidance and Backlog - 2025 sales guidance is projected between $42,000 million and $42,500 million, down from a prior range of $44,650 million to $44,800 million[30] - Operating income guidance for 2025 is set between $4,200 million and $4,350 million, revised from a previous estimate of $4,650 million to $4,800 million[30] - MTM-adjusted EPS guidance for 2025 is expected to be between $24.95 and $25.35, a decrease from the prior range of $27.85 to $28.25[30] - Free cash flow guidance for 2025 is projected between $2,850 million and $3,250 million[30] - First quarter 2025 net awards reached $10.8 billion, contributing to a record backlog of $92.8 billion[4] - Total backlog increased to $92,797 million as of March 31, 2025, reflecting a 1% growth from $91,468 million in 2024[50] - Aeronautics Systems backlog was $25,454 million, up 1% from $25,202 million year-over-year[50] - Mission Systems backlog grew by 7% to $17,626 million from $16,443 million in the previous year[50] Assets and Liabilities - Total assets as of March 31, 2025, were $48,468 million, a decrease from $49,359 million as of December 31, 2024[44] - Total liabilities as of March 31, 2025, were $33,484 million, down from $34,069 million as of December 31, 2024[44] Other Financial Metrics - The company recognized a pre-tax loss of $477 million on the B-21 program, impacting diluted EPS by $2.74[2] - The weighted-average diluted shares outstanding decreased to 144.9 million from 149.3 million year-over-year[55] - The per share impact of total net FAS/CAS pension adjustment was $0.99, compared to $0.87 in the same period of 2024[55]

Core Viewpoint - Northrop Grumman Corporation (NOC) is expected to report its first-quarter 2025 results on April 22, with a projected earnings per share (EPS) of $6.27, reflecting a 0.8% decline year-over-year. The overall revenue is estimated at $10.05 billion, indicating a slight decrease of 0.8% from the previous year, primarily due to a downturn in the Space Systems segment [1][7][9]. Revenue Performance by Segment - **Aeronautics Systems**: Anticipated revenue of $3,171.5 million, representing a 6.8% increase from the prior year, driven by higher production volumes of B-21 and F-35 aircraft, and increased sustainment work [2][4]. - **Defense Systems**: Expected revenue of $1,886.1 million, showing a significant growth of 33.6% year-over-year, supported by higher sales from the Sentinel program and international ammunition sales [3]. - **Mission Systems**: Projected revenue of $2,763.4 million, indicating a growth of 3.9% from the previous year, bolstered by increased sales in advanced microelectronics and marine systems [4]. - **Space Systems**: Estimated revenue of $2,657.9 million, reflecting a decline of 27.3% year-over-year, primarily due to the wind-down of work on restricted space and NGI programs [5]. Backlog and Operational Insights - The backlog for NOC is projected to increase by 16.5% year-over-year to $91.98 billion, indicating strong future demand [6]. - Despite the decline in the Space Systems segment, the overall performance is expected to benefit from favorable operating margins due to efficiency initiatives and international growth [8]. Earnings Prediction and Market Position - The Zacks Consensus Estimate indicates a potential earnings miss for NOC, with an Earnings ESP of -2.74% and a Zacks Rank of 3 (Hold), suggesting a cautious outlook for the upcoming earnings report [10][11].

Core Viewpoint - Northrop Grumman (NOC) is expected to report quarterly earnings of $6.27 per share, reflecting a 0.8% decline year-over-year, with revenues forecasted at $10.05 billion, also down 0.8% from the previous year [1] Earnings Estimates - The consensus EPS estimate for the quarter has remained unchanged over the past 30 days, indicating analysts' reassessment of their projections [1][2] - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock [2] Key Metrics Forecast - Analysts predict 'Sales- Mission Systems' at $2.76 billion, a year-over-year increase of 3.9% [4] - 'Sales- Aeronautics Systems' is expected to reach $3.17 billion, reflecting a 6.8% increase year-over-year [4] - 'Sales- Space Systems' is forecasted to decline to $2.66 billion, a significant decrease of 27.3% year-over-year [4] Operating Income Projections - 'Sales- Defense Systems' is anticipated to reach $1.89 billion, marking a 33.6% increase from the prior-year quarter [5] - 'Operating income (loss)- Defense Systems' is expected at $182.36 million, up from $177 million in the same quarter last year [5] - 'Operating income (loss)- Mission Systems' is forecasted at $398.01 million, compared to $378 million in the previous year [5] - 'Operating income (loss)- Space Systems' is estimated at $285.17 million, down from $332 million year-over-year [6] - 'Operating income (loss)- Aeronautics Systems' is projected at $303.28 million, slightly up from $297 million in the same quarter last year [6] - 'Segment operating income adjustment- FAS/CAS operating adjustment' is expected to be $64.69 million, a significant increase from $6 million in the same quarter last year [7] Stock Performance - Northrop Grumman shares have increased by 8.1% over the past month, contrasting with the Zacks S&P 500 composite's decline of 4.2% [8] - The company holds a Zacks Rank 3 (Hold), indicating it is expected to closely follow overall market performance in the near term [8]

Core Viewpoint - The market anticipates a year-over-year decline in Northrop Grumman's earnings due to lower revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Northrop Grumman is expected to report quarterly earnings of $6.29 per share, reflecting a -0.5% change year-over-year, with revenues projected at $10.07 billion, down 0.6% from the previous year [3]. - The consensus EPS estimate has been revised 0.04% higher in the last 30 days, indicating a slight positive adjustment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Northrop Grumman is lower than the consensus estimate, resulting in an Earnings ESP of -3.21%, indicating bearish sentiment among analysts [10][11]. - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3, which increases the likelihood of a positive surprise [8]. Historical Performance - Northrop Grumman has beaten consensus EPS estimates in the last four quarters, with a notable surprise of +1.91% in the most recent quarter [12][13]. Conclusion - Northrop Grumman does not appear to be a compelling candidate for an earnings beat based on current estimates and sentiment, but other factors should also be considered when evaluating the stock ahead of its earnings release [16].

Core Viewpoint - Northrop Grumman Corp. has secured a $24.1 million modification contract for its E-2C and E-2D Hawkeye jets, which will enhance its position in the military aviation market and is expected to be completed by April 2026 [2][5]. Group 1: Contract Details - The contract involves continued sustainment and technical support for E-2C and E-2D aircraft, including foreign military sales to France, Japan, Taiwan, and Egypt [2]. - Most of the work will be conducted in Melbourne, FL, and Misawa, Japan [2]. Group 2: Significance of E-2C & E-2D Jets - The E-2D Hawkeye provides advanced battle management, missile defense, and sensor fusion capabilities, enhancing situational awareness for military operations [3]. - The E-2C Hawkeye serves as a modern airborne early warning aircraft, crucial for air and missile defense missions [4]. Group 3: Market Demand and Growth Potential - The demand for Northrop's E-2C and E-2D jets is driven by rising military conflicts and technological advancements, which are expected to boost the company's top-line performance [5]. - The global military aviation market is projected to grow at a compound annual growth rate of 4.7% from 2025 to 2030, benefiting Northrop due to its established product portfolio [6][7]. Group 4: Competitors and Market Landscape - Other aerospace companies like Embraer, Boeing, and Lockheed Martin are also positioned to benefit from the expanding military aviation market, with each having strong growth forecasts [8][10][11]. Group 5: Stock Performance - Northrop's stock has increased by 5% over the past three months, contrasting with a 7.2% decline in the industry [12].