Northrop Grumman's Q1 Bottom-Line Beats Street View; Reaffirms FY22 Guidance

  • Northrop Grumman Corp NOC reported a first-quarter FY22 sales decline of 4% year-over-year to $8.79 billion, -2% on an organic basis, missing the consensus of $8.88 billion.
  • Sales by segments: Aeronautics Systems $2.7 billion (-10% Y/Y), Defense Systems $1.28 billion (-18% Y/Y), Mission Systems $2.49 billion (-4% Y/Y), and Space Systems $2.86 billion (+13% Y/Y).
  • The company attributed the lower Q1 sales, in part, to a $162 million reduction in sales related to the IT services divestiture.
  • Adjusted EPS was $6.10, above the consensus of $5.96.
  • Total operating income was $897 million vs. $2.82 billion in 1Q21, and the margin contracted to 10.2% from 30.8%, while the segment operating margin contracted 20 bps to 11.8%.
  • Northrop Grumman used cash in operating activities of $488 million in Q1, compared to $66 million a year ago, with an adjusted free cash outflow of $732 million.
  • The company's backlog was $75.8 billion as of March 31, 2022. Net awards in the quarter totaled $8.5 billion.
  • FY22 Outlook reaffirmed: Northrop Grumman expects sales of $36.2 billion-$36.6 billion, against the consensus of $36.6 billion. Transaction adjusted EPS of $24.50 -$25.10 versus the consensus of $24.86.
  • It expects a segment operating margin of 11.7% to 11.9%.
  • Price Action: NOC shares traded higher by 1.90% at $448.13 on the last check Thursday.
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