Northrop Grumman Stock Slips After Q4 Revenue Miss, Moderate FY22 Outlook; Boosts Buyback

Northrop Grumman Corp NOC reported a fourth-quarter FY21 sales decline of 15% year-over-year to $8.64 billion, -10% on an organic basis, missing the consensus of $8.99 billion.
Sales by segments: Aeronautics Systems $2.63 billion (-25% Y/Y), Defense Systems $1.38 billion (-28% Y/Y), Mission Systems $2.52 billion (-8% Y/Y), and Space Systems $2.66 billion (+4% Y/Y).
The company attributed the lower Q4 sales, in part, to a $583 million reduction in sales related to the IT services divestiture.
Adjusted EPS was $6.00, a decline from $6.59 in 4Q20, beating the consensus of $5.99.
Total operating income fell by 36% Y/Y to $742 million, and the margin contracted by 270 bps to 8.6%, while the segment operating margin was flat at 11.2%.
Northrop Grumman generated cash from operating activities for FY21 of $3.57 billion, compared to $4.31 billion a year ago, with an adjusted Free cash flow of $2.24 billion (-39% Y/Y).
The company's backlog was $76 billion as of December 31, 2021. Net awards in the quarter totaled $9.8 billion.
Buyback: Northrop Grumman's board increased share repurchase authorization by $2 billion, bringing the total outstanding authorization up to $4.2 billion.
FY22 Outlook: Northrop Grumman expects sales of $36.2 billion-$36.6 billion, below the consensus of $37.03 billion. Transaction adjusted EPS of $24.50 -$25.10 versus the consensus of $25.09.
Price Action: NOC shares traded lower by 7.37% at $373.49 on the last check Thursday.

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