Net earnings for the first quarter fell to $481 million, or $3.32 per diluted share, down from $944 million, or $6.32 per diluted share, a year earlier. The results were impacted by a pre-tax loss of $477 million on the B-21 programme at Aeronautics Systems, stemming from higher manufacturing costs linked to process changes aimed at accelerating production.
Kathy Warden, chair, chief executive officer and president, said: “Global demand for our products remains strong, which is reflected in our record first quarter backlog, and we are making significant progress on our key programs.” She added, “The Northrop Grumman team remains committed to driving innovation to meet our customers’ priorities, expanding our market presence and optimizing performance to deliver profitable, sustainable growth.”
Sales at Space Systems declined partly due to the aforementioned programme wind-down, while Aeronautics Systems also recorded lower sales. These declines were partially offset by higher sales at Mission Systems and Defense Systems.
Operating income for the quarter fell by 46 percent to $581 million, mainly due to the B-21 loss provision and reduced income at Space Systems and Mission Systems. The operating margin rate dropped to 6.1 percent from 10.6 percent, although Defense Systems reported an increase in operating margin.
Segment operating income also decreased by 49 percent to $551 million, with the segment operating margin rate falling to 6.0 percent from 10.9 percent. The company cited the B-21 loss provision and a lower margin rate at Mission Systems as primary reasons for the decline.
Northrop Grumman’s effective tax rate rose slightly to 16.8 percent from 16.5 percent in the previous year, influenced by factors including interest expenses on unrecognised tax benefits and employee share-based compensation. Research credits helped to partially offset these increases.
Cash flow from operating activities dropped by 122 percent, primarily due to changes in trade working capital and the timing of vendor payments, billings and collections. Free cash flow similarly declined by 87 percent compared to the first quarter of 2024.
Despite the lower sales and earnings, the company secured net awards of $10.8 billion in the first quarter, with its backlog reaching a record $92.8 billion. Key awards included $4.6 billion for restricted programmes, $1.1 billion for F-35 projects, $0.5 billion for the Integrated Battle Command System, and $0.3 billion each for the Triton and E-2 programmes.
Source: Northrop Grumman.
