Northrop Grumman Ascends: Q2 Earnings Soar as Defense Demand Skyrockets

Northrop Grumman Corp NOC reported second-quarter fiscal 2024 sales growth of 7% year-over-year to $10.218 billion, beating the consensus of $10.018 billion.

The increase reflects higher sales in all four sectors and continued strong demand for products and services.

Second-quarter EPS was $6.36 compared to $5.34 a year ago, beating the consensus of $5.92.

Sales by segments: Aeronautics Systems $2.96 billion (+14% Y/Y), Defense Systems $1.513 billion (+7% Y/Y), Mission Systems $2.77 billion (+5% Y/Y), and Space Systems $3.57 billion (+2% Y/Y).

Segment operating income rose 5% Y/Y to $1.101 billion, and the margin contracted by 20 bps to 10.8%. Total operating margin expanded by 60 bps to 10.7%.

NOC’s second-quarter net awards totaled $15.1 billion, and its backlog totaled $83.1 billion.

The company’s operating cash flow for the quarter totaled $1.425 billion, and the free cash flow increased 80% to $1.105 billion.

“We are laser focused on performance and continue to expand profitability through the deliberate actions we are taking. With strong support for our programs, growing global orders for our products, and solid execution in our business, we are increasing our revenue and EPS guidance for the year,” commented Kathy Warden, chair, chief executive officer, and president.

Fiscal 2024 Outlook, raised: Northrop Grumman now expects sales of $41 billion-$41.4 billion (from $40.8 billion – $41.2 billion) versus the consensus of $41.139 billion.

The company now sees MTM-adjusted EPS of $24.90 – $25.30 (prior $24.45-$24.85) versus consensus of $24.76.

It sees Segment operating income of $4.5 billion-$4.575 billion (prior $4.475 billion-$4.55 billion) and adjusted free cash flow of $2.25 billion-$2.65 billion for 2024.

Price Action: NOC shares traded higher by 6.06% at $468.92 at the last check on Thursday.

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