Northrop Grumman (NOC) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales rose 7% year-over-year to $10.2 billion, with growth across all four segments, led by Aeronautics Systems at 14%.

• Net earnings for Q2 2024 increased 16% to $940 million, and diluted EPS rose 19% to $6.36, driven by higher operating income and a lower share count.

• Free cash flow surged 80% to $1.1 billion, supported by improved working capital and lower tax payments.

• Backlog reached $83.1 billion, with a Q2 book-to-bill ratio of 1.5x and net awards of $15.1 billion.

• The company increased 2024 revenue and EPS guidance, with 85% of sales from advanced technology and 15% from strategic deterrent programs.

Financial highlights

• Q2 operating income increased 13% year-over-year to $1.09 billion; operating margin improved to 10.7%.

• Q2 segment operating income was $1.1 billion, up 5% year-over-year.

• Free cash flow for Q2 was $1.1 billion, up 80% year-over-year; cash and cash equivalents totaled $3.3 billion at quarter-end.

• Dividend increased by 10% in May, marking 21 consecutive annual increases.

• Weighted average diluted shares outstanding decreased 3% year-over-year to the mid-147 million range.

Outlook and guidance

• 2024 sales guidance raised to $41.0–$41.4 billion; MTM-adjusted EPS guidance increased to $24.90–$25.30.

• Segment guidance updated to reflect realignment of Strategic Deterrent Systems from Space to Defense Systems.

• Free cash flow CAGR projected above 15% through 2026; capital expenditures targeted at $1.8 billion for 2024.

• Margins expected to improve from 11% in 2024, with a path to 12% over the decade.

• Guidance reflects expectations amid inflation, labor, supply chain, and geopolitical risks; does not assume government shutdown or spending cuts.