Northrop Grumman (NOC) Q1 2025 earnings summary

Executive summary

• Q1 2025 sales declined 7% year-over-year to $9.47–$9.5 billion, impacted by B-21 program charges, fewer working days, and Space Systems wind-down.

• Net earnings dropped 49% to $481 million, with diluted EPS at $3.32, including a $2.74 per share impact from a $477 million B-21 loss provision.

• Record backlog reached $92.8 billion, supported by $10.8 billion in new awards and strong international demand.

• Despite operational headwinds, 2025 sales and free cash flow guidance were reaffirmed.

• Focus remains on disciplined investment, technology enablement, and efficient capital deployment.

Financial highlights

• Segment operating margin rate fell to 6.0–6.1% from over 10% year-over-year, mainly due to the B-21 loss provision.

• Q1 diluted EPS was $3.32, down from $6.32, with a $2.74 negative impact from the B-21 adjustment.

• Free cash flow for Q1 2025 was $(1.8)–$(1.82) billion, down 87% year-over-year due to working capital changes and B-21 provision.

• $1.5 billion in notes repaid and nearly $800 million returned to shareholders via dividends and share repurchases.

• Quarterly dividend increased 10% to $2.06 per share.

Outlook and guidance

• 2025 sales guidance reaffirmed at $42.0–$42.5 billion, with segment operating income of $4.2–$4.35 billion.

• MTM-adjusted EPS guidance lowered to $24.95–$25.35 from prior $27.85–$28.25.

• Free cash flow guidance for 2025 reaffirmed at $2.85–$3.25 billion.

• Plan to return nearly 100% of 2025 free cash flow to shareholders.

• Segment guidance: Aeronautics sales low $13B, OM rate low to mid 6%; Defense sales low $8B, OM rate mid to high 9%; Mission sales ~$12B, OM rate mid 14%; Space sales high $11B, OM rate high 10%.