Northrop Grumman (NOC) Q4 2024 earnings summary

Executive summary

• Achieved record backlog of $91.5B, driven by $51B in 2024 net awards and major wins like TACAMO and B-21 LRIP Lot 2; book-to-bill ratio at 1.23 for 2024 and 1.15 three-year average.

• 2024 sales rose 4.4% to $41.0B, with growth in three of four segments and strong demand.

• Net earnings for 2024 were $4.2B ($28.34 per diluted share), up 103% year-over-year; MTM-adjusted EPS was $26.08.

• Free cash flow rose 25% year-over-year to $2.62B, at the high end of guidance.

• Announced divestiture of the Training Services business for $327M, expected to close mid-2025, as part of portfolio management.

Financial highlights

• 2024 sales: $41.0B, up 4.4% from 2023, with segment operating income up 65% to $4.54B and segment margin at 11.1%.

• Operating cash flow was $4.4B; capital expenditures totaled $1.77B.

• MTM-adjusted EPS grew from $15.61 in 2023 to $26.08 in 2024, driven by strong segment performance and absence of prior B-21 charge.

• Net earnings increased to $4.17B in 2024 from $2.06B in 2023; diluted EPS at $28.34.

• Free cash flow for 2024 increased 25% to $2.62B.

Outlook and guidance

• 2025 sales guidance: $42.0B–$42.5B; segment operating income: $4.65B–$4.8B; MTM-adjusted EPS: $27.85–$28.25; free cash flow: $2.85B–$3.25B.

• 2025 organic sales growth expected at 3%-4%, with double-digit free cash flow growth and further margin expansion.

• Multi-year free cash flow outlook reflects ~14% CAGR, targeting ~$4B in 2028.

• 2025 guidance includes Training Services divestiture and ~$150M after-tax gain from sale.

• Expect to return ~100% of free cash flow to shareholders.