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Northrop Grumman's (NOC) Q1 Earnings Top, Sales Decline Y/Y

Zacks Equity Research
·4 min read

Northrop Grumman Corporation NOC reported first-quarter 2022 earnings of $6.10 per share, which surpassed the Zacks Consensus Estimate of $5.95 by 2.5%. The bottom line decreased 54.6% from $13.43 reported in the year-ago quarter.

Total Sales

In the first quarter of 2022, Northrop Grumman reported total sales of $8.80 billion, which missed the Zacks Consensus Estimate of $8.88 billion by 0.9%. Sales also decreased 4% from the year-ago quarter’s $9.16 billion.

The downside was primarily due to a reduction in sales related to the IT services divestiture.

Organic sales dropped 2% year over year, primarily due to lower sales at Aeronautics Systems and Defense Systems segments.

Northrop Grumman Corporation Price, Consensus and EPS Surprise

Northrop Grumman Corporation Price, Consensus and EPS Surprise
Northrop Grumman Corporation Price, Consensus and EPS Surprise

Northrop Grumman Corporation price-consensus-eps-surprise-chart | Northrop Grumman Corporation Quote

Backlog Count

Northrop Grumman’s total backlog stood at $75.79 billion at the end of first-quarter 2022 compared with $76.05 billion at the 2021 end.

Segmental Details

Aeronautics Systems: Segment sales of $2,703 million declined 10% year over year due to lower volume in both Manned Aircraft and Autonomous Systems.

Operating income remained almost flat at $307 million, whereas operating margin expanded 110 basis points (bps) to 11.4%.

Mission Systems: Segment sales decreased 4% to $2,497 million due to a $42 million reduction in sales related to the IT services divestiture.

Operating income rose 3% to $385 million, with operating margin expanding 10 bps to 15.4%.

Defense Systems: Sales at this segment declined 18% to $1,283 million due to a reduction in sales related to the IT services divestiture.

Operating income declined 12% to $155 million while operating margin expanded 80 bps to 12.1%.

Space Systems: Space Systems’ first-quarter 2022 sales rose 13% to $2,855 million due to higher sales from the Space and Launch & Strategic Missiles businesses.

The segment’s operating income declined 5% to $261 million. Operating margin contracted 180 bps to 9.1%.

Operational Update

Operating income during the quarter declined 68.2% to $897 million, primarily due to lower segment income.

Financial Condition

Northrop Grumman’s cash and cash equivalents at the end of first-quarter 2022 was $2,174 million, down from $3,530 million as of Dec 31, 2021.

Long-term debt (net of the current portion) at the end of first-quarter 2022 was $12,825 million, up from $12,777 million as of Dec 31, 2021.

Net cash outflow from operating activities at the end of the first quarter was $488 million compared with $66 million as of Mar 31, 2021.

2022 Guidance

Northrop Grumman reaffirmed its financial guidance for 2022.

The company still expects to generate revenues in the range of approximately $36.2-36.6 billion for 2022. The Zacks Consensus Estimate of $36.68 billion lies above the company’s guided range.

The company’s 2022 adjusted earnings are currently projected in the range of $24.50-$25.10 per share. The Zacks Consensus Estimate of $24.80 per share is in line with the mid-point of the guided range.

The company expects its adjusted free cash flow in the range of $2.50-$2.80 billion in 2022.

Zacks Rank

Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Defense Releases

Raytheon Technologies’ RTX first-quarter 2022 adjusted earnings per share (EPS) of $1.15 beat the Zacks Consensus Estimate of $1.01 by 13.9%. Moreover, the bottom-line figure improved 27.8% from the year-ago quarter’s adjusted earnings of 90 cents.

Raytheon’s first-quarter sales of $15,716 million missed the Zacks Consensus Estimate of $15,799 million by 0.5%. The sales figure, however, rose 3% from $15,251 million recorded in the year-ago quarter.

Lockheed Martin LMT reported first-quarter 2022 earnings of $6.44 per share, which surpassed the Zacks Consensus Estimate of $6.22 by 3.5%. The bottom line however declined 1.8% year over year.

Lockheed Martin’s net sales amounted to $14.96 billion, which missed the Zacks Consensus Estimate of $15.53 billion by 3.7%. The top line also declined 8% from $16.26 billion reported in the year-ago quarter

Teledyne Technologies Inc. TDY reported first-quarter 2022 adjusted earnings of $4.27 per share, which surpassed the Zacks Consensus Estimate of $4.09 by 4.4%. The bottom line also improved 33.9% from the year-ago quarter’s $3.19 per share.

Teledyne’s total sales in the first quarter amounted to $1,321 million, which exceeded the Zacks Consensus Estimate of $1,315 million by 0.5%. The top line also improved 64% from $805.7 million reported a year ago.


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