Defense Manufacturer Northrop Grumman Sees Record Backlog In Q3, Raises Annual Outlook

Northrop Grumman Corp NOC reported third-quarter FY23 sales growth of 9% year-over-year to $9.78 billion, beating the consensus of $9.58 billion.

EPS was $6.18, up from $5.89 in 322. Net earnings increased by 2% Y/Y to $937 million.

Sales by segments: Aeronautics Systems $2.77 billion (+9% Y/Y), Defense Systems $1.42 billion (+6% Y/Y), Mission Systems $2.63 billion (+7% Y/Y), and Space Systems $3.51 billion (+11% Y/Y).

NOC stated that Q3 sales reflect continued strong demand for its products and services.

Total operating income was $1.02 billion (+20% Y/Y), and the margin expanded by 100 bps to 10.4%, while the segment operating margin contracted by ten bps to 11.1%.

For the quarter, net awards totaled $15 billion, and backlog totaled $83.9 billion.

Operating cash flow totaled $1.23 billion, compared to $1.34 billion in 3Q22. Adjusted free cash flow was $869 million.

“Based on our year-to-date results and increasing demand for our products, we are raising our 2023 sales guidance. We are also providing an initial 2024 outlook that reflects our expectation for solid revenue, operating income and free cash flow growth,” commented Kathy Warden, chair, CEO, and president.

FY23 Outlook, updated: Northrop Grumman raises sales guidance to $39 billion (prior view of $38.4 billion-$38.8 billion) versus the consensus of $38.77 billion. The company reaffirmed its MTM-adjusted EPS guidance of $22.24-$22.85 versus the consensus of $22.72.

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 0.61% at $486.21 on the last check Thursday.