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.

• Operating income grew 13% to $1.09 billion, reflecting cost efficiencies and improved performance.

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

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

Financial highlights

• Q2 2024 sales: $10.2B (+7% YoY); net earnings: $940M (+16% YoY); operating income: $1.09B (+13% YoY).

• Diluted EPS: $6.36 (+19% YoY); operating margin rate: 10.7% (up 60 bps YoY).

• Free cash flow: $1.1B (+80% YoY); operating cash flow: $1.4B.

• Quarterly dividend increased by 10% in May 2024, marking 21 consecutive annual increases.

• Cash and cash equivalents totaled $3.3 billion at quarter-end.

Outlook and guidance

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

• Free cash flow guidance maintained at $2.25B–$2.65B; confident in >15% three-year free cash flow CAGR.

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

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

• Margins expected to improve in 2025 and beyond as macro headwinds dissipate and business mix shifts to more profitable programs.