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Northrop Grumman's (NOC) Q1 Earnings Top, Sales Decline Y/Y

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Northrop Grumman Corporation (NOC - Free Report) reported first-quarter 2022 earnings of $6.10 per share, which surpassed the Zacks Consensus Estimate of $5.95 by 2.5%. The bottom line decreased 54.6% from $13.43 reported in the year-ago quarter.

Total Sales

In the first quarter of 2022, Northrop Grumman reported total sales of $8.80 billion, which missed the Zacks Consensus Estimate of $8.88 billion by 0.9%. Sales also decreased 4% from the year-ago quarter’s $9.16 billion.

The downside was primarily due to a reduction in sales related to the IT services divestiture.

Organic sales dropped 2% year over year, primarily due to lower sales at Aeronautics Systems and Defense Systems segments.

Backlog Count

Northrop Grumman’s total backlog stood at $75.79 billion at the end of first-quarter 2022 compared with $76.05 billion at the 2021 end.

Segmental Details

Aeronautics Systems: Segment sales of $2,703 million declined 10% year over year due to lower volume in both Manned Aircraft and Autonomous Systems.

Operating income remained almost flat at $307 million, whereas operating margin expanded 110 basis points (bps) to 11.4%.

Mission Systems: Segment sales decreased 4% to $2,497 million due to a $42 million reduction in sales related to the IT services divestiture.

Operating income rose 3% to $385 million, with operating margin expanding 10 bps to 15.4%.

Defense Systems: Sales at this segment declined 18% to $1,283 million due to a reduction in sales related to the IT services divestiture.

Operating income declined 12% to $155 million while operating margin expanded 80 bps to 12.1%.

Space Systems: Space Systems’ first-quarter 2022 sales rose 13% to $2,855 million due to higher sales from the Space and Launch & Strategic Missiles businesses.

The segment’s operating income declined 5% to $261 million. Operating margin contracted 180 bps to 9.1%.

Operational Update

Operating income during the quarter declined 68.2% to $897 million, primarily due to lower segment income.

Financial Condition

Northrop Grumman’s cash and cash equivalents at the end of first-quarter 2022 was $2,174 million, down from $3,530 million as of Dec 31, 2021.

Long-term debt (net of the current portion) at the end of first-quarter 2022 was $12,825 million, up from $12,777 million as of Dec 31, 2021.

Net cash outflow from operating activities at the end of the first quarter was $488 million compared with $66 million as of Mar 31, 2021.

2022 Guidance

Northrop Grumman reaffirmed its financial guidance for 2022.

The company still expects to generate revenues in the range of approximately $36.2-36.6 billion for 2022. The Zacks Consensus Estimate of $36.68 billion lies above the company’s guided range.

The company’s 2022 adjusted earnings are currently projected in the range of $24.50-$25.10 per share. The Zacks Consensus Estimate of $24.80 per share is in line with the mid-point of the guided range.

The company expects its adjusted free cash flow in the range of $2.50-$2.80 billion in 2022.

Zacks Rank

Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Raytheon Technologies’ (RTX - Free Report) first-quarter 2022 adjusted earnings per share (EPS) of $1.15 beat the Zacks Consensus Estimate of $1.01 by 13.9%. Moreover, the bottom-line figure improved 27.8% from the year-ago quarter’s adjusted earnings of 90 cents.

Raytheon’s first-quarter sales of $15,716 million missed the Zacks Consensus Estimate of $15,799 million by 0.5%. The sales figure, however, rose 3% from $15,251 million recorded in the year-ago quarter.

Lockheed Martin (LMT - Free Report) reported first-quarter 2022 earnings of $6.44 per share, which surpassed the Zacks Consensus Estimate of $6.22 by 3.5%. The bottom line however declined 1.8% year over year.

Lockheed Martin’s  net sales amounted to $14.96 billion, which missed the Zacks Consensus Estimate of $15.53 billion by 3.7%. The top line also declined 8% from $16.26 billion reported in the year-ago quarter

Teledyne Technologies Inc. (TDY - Free Report) reported first-quarter 2022 adjusted earnings of $4.27 per share, which surpassed the Zacks Consensus Estimate of $4.09 by 4.4%. The bottom line also improved 33.9% from the year-ago quarter’s $3.19 per share.

Teledyne’s total sales in the first quarter amounted to $1,321 million, which exceeded the Zacks Consensus Estimate of $1,315 million by 0.5%. The top line also improved 64% from $805.7 million reported a year ago.


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