What's Going On With Northrop Grumman Shares Today?

Northrop Grumman Corp NOC reported second-quarter FY23 sales growth of 9% year-over-year to $9.58 billion, beating the consensus of $9.35 billion.

EPS was $5.34 (-12% Y/Y), above the consensus of $5.33.

Sales by segments: Aeronautics Systems $2.59 billion (+2% Y/Y), Defense Systems $1.42 billion (+10% Y/Y), Mission Systems $2.64 billion (+5% Y/Y), and Space Systems $3.49 billion (+17% Y/Y).

NOC stated that Q2 sales reflect continued strong demand, improving labor availability, and supplier deliveries.

Total operating income was $967 million (+1% Y/Y), and the margin contracted 70 bps to 10.1%, while the segment operating margin contracted by 120 bps to 11%.

Q2 net awards totaled $10.9 billion, and backlog totaled $78.8 billion.

Operating cash flow totaled $919 million, compared to cash used of $(197) million in 2Q22. Adjusted free cash flow was $615 million.

“With backlog more than double annual sales and a robust U.S. and international outlook for our programs, we have increased our full year sales guidance by $400 million. We are driving affordability measures to partially offset the impacts of inflation for our customers and we expect margins to expand as macroeconomic headwinds stabilize and we shift our portfolio to more production and international volume,” commented Kathy Warden, chair, CEO, and president.

FY23 Outlook, raised: Northrop Grumman sees sales of $38.4 billion-$38.8 billion (prior view $38 billion-$38.4 billion) versus the consensus of $38.39 billion. 

The company raised its MTM-adjusted EPS guidance to $22.24-$22.85 (prior view $22.25-$22.85) versus the consensus of $22.60.

NOC continues to see an adjusted free cash flow of $1.85 billion-$2.15 billion for FY23.

Price Action: NOC shares traded lower by 5% at $434.30 on the last check Thursday.