Fourth Quarter 2025 Conference Call This presentation and the information we are incorporating by reference, and statements to be made on the earnings conference call, contain or may contain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "will," "expect," "anticipate," "intend," "may," "could," "should," "plan," "strategy," "project," "forecast," "achieve," "believe," "estimate," "guidance," "outlook," "trends ...

Core Insights - Northrop Grumman reported quarterly earnings of $7.23 per share, exceeding the Zacks Consensus Estimate of $7 per share, and showing an increase from $6.39 per share a year ago, resulting in an earnings surprise of +3.27% [1] - The company achieved revenues of $11.71 billion for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 0.83% and up from $10.69 billion year-over-year [2] Earnings Performance - Over the last four quarters, Northrop Grumman has surpassed consensus EPS estimates three times, indicating strong earnings performance [2] - The company had a previous quarter earnings surprise of +18.18%, with actual earnings of $7.67 per share against an expected $6.49 [1] Stock Performance - Northrop Grumman shares have increased approximately 15.9% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.5% [3] Future Outlook - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at $6.24 for the coming quarter and $28.78 for the current fiscal year [7] - The Zacks Rank for Northrop Grumman is currently 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [6] Industry Context - The Aerospace - Defense industry, to which Northrop Grumman belongs, is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable industry outlook [8]

Core Viewpoint - Northrop Grumman Corporation has released its fourth quarter and full-year 2025 financial results, indicating significant developments in its financial performance [1] Financial Results - The earnings release is available in the company's Form 8-K filing and on its investor relations website [1] - A webcast of the earnings conference call is scheduled for 9:30 a.m. Eastern time, providing live audio for stakeholders [2] Company Overview - Northrop Grumman is recognized as a leading global aerospace and defense technology company, focusing on innovative solutions that enhance customer capabilities [3] - The company emphasizes its commitment to solving complex problems for its customers and advancing human exploration [3]

Aerospace and defense supplier Northrop Grumman posted higher fourth-quarter profit and revenue on Tuesday, helped by strong sales in its aeronautics business amid heightened geopolitical uncertainty. ...

Sales Performance - Fourth quarter 2025 sales increased 10% to $11.7 billion, compared to $10.7 billion in Q4 2024[2] - Full-year 2025 sales rose 2% to $42.0 billion, up from $41.0 billion in 2024, with organic sales increasing 3% to $41.8 billion[2][3] - Fourth quarter 2025 sales increased by $591 million, or 18 percent, primarily due to a $274 million increase on the F-35 program and a $153 million increase on the E-130J TACAMO program [22] - Total sales for 2025 reached $41,954 million, an increase from $41,033 million in 2024 and $39,290 million in 2023[57] Earnings and Profitability - Fourth quarter 2025 net earnings were $1.4 billion, or $9.99 per diluted share, while full-year net earnings were $4.2 billion, or $29.08 per diluted share[2][3] - 2025 net earnings were comparable to the prior year, reflecting a $141 million increase in operating income, partially offset by a $115 million decrease in non-operating FAS pension benefit [16] - Net earnings for 2025 were $4,182 million, compared to $4,174 million in 2024 and $2,056 million in 2023[57] - Basic earnings per share for 2025 were $29.14, up from $28.39 in 2024 and $13.57 in 2023[57] Operating Income and Margins - Operating income for Q4 2025 increased 17% to $1.3 billion, with an operating margin rate of 10.9%[3] - Segment operating income for Q4 2025 increased 10%, with a segment operating margin rate of 11.2%[3][9] - Fourth quarter 2025 operating margin rate for Aeronautics Systems was 9.4 percent, comparable to the prior year, while the overall segment operating margin rate was 11.2 percent [1] - Fourth quarter 2025 operating income for Mission Systems increased by $41 million, or 9 percent, with an operating margin rate of 14.8 percent [36] - Fourth quarter 2025 operating income for Space Systems increased by $47 million, or 17 percent, with an operating margin rate of 11.3 percent [41] Cash Flow and Capital Expenditures - Operating cash flow for 2025 was $4.8 billion, with free cash flow of $3.3 billion[3] - Fourth quarter 2025 free cash flow increased by $1.5 billion, or 84 percent, driven by higher net cash from operating activities and lower capital expenditures [17] - Capital expenditures for 2025 were $1,450 million, down from $1,767 million in 2024[63] - Free cash flow for 2025 was calculated as net cash provided by operating activities minus capital expenditures, indicating strong cash performance[77] Backlog and Future Projections - The backlog reached a record $95.7 billion, driven by a full-year book-to-bill ratio of 1.10[3] - Total backlog as of the end of 2025 was $95.7 billion, with significant new awards including $4.0 billion for restricted programs and $1.3 billion for F-35 [18] - The company projects mid-single digit sales growth for 2026, supported by a strong backlog[3] - The company projects 2026 sales between $43,500 million and $44,000 million, with segment operating income expected to be between $4,850 million and $5,000 million[46] Tax and Shares - The effective income tax rate for 2025 was 17.5%, compared to 16.8% in 2024[6] - The weighted-average diluted shares outstanding decreased to 142.9 million in 2025 from 145.9 million in 2024[71] Assets and Debt - Total assets increased to $51,377 million in 2025 from $49,359 million in 2024[60] - Net proceeds from the issuance of long-term debt in 2025 were $998 million, a decrease from $2,495 million in 2024[63] - Cash and cash equivalents at the end of 2025 were $4,403 million, up from $4,353 million at the end of 2024[63]

Northrop Grumman Corporation (NYSE:NOC) will release earnings for the fourth quarter before the opening bell on Tuesday, Jan. 27.Analysts expect the Falls Church, Virginia-based company to report fourth-quarter earnings of $6.96 per share. That's up from $6.39 per share in the year-ago period. The consensus estimate for Northrop Grumman’s quarterly revenue is $11.62 billion (it reported $10.69 billion last year), according to Benzinga Pro.On Nov. 6, Northrop Grumman announced that it has elected John Greene ...

Northrop Grumman Corporation (NYSE:NOC) will release earnings for the fourth quarter before the opening bell on Tuesday, Jan. 27.Analysts expect the Falls Church, Virginia-based company to report fourth-quarter earnings of $6.96 per share. That's up from $6.39 per share in the year-ago period. The consensus estimate for Northrop Grumman’s quarterly revenue is $11.62 billion (it reported $10.69 billion last year), according to Benzinga Pro.On Nov. 6, Northrop Grumman announced that it has elected John Greene ...

Core Insights - Northrop Grumman has secured a contract valued at approximately $231.5 million to deliver the XQ-58 Valkyrie drone for the U.S. Marine Corps, marking a shift in military procurement towards rapid prototyping and operational testing [2] - The collaboration with Kratos Defense emphasizes the development of a tactical aircraft system that focuses on distributed operations and adaptability in response to advanced threats [3][4] Group 1: Contract and Collaboration - The contract is part of the MUX TACAIR CCA program, which aims to enhance the U.S. Marine Corps' capabilities through a collaborative approach rather than adhering to rigid specifications [2][3] - Northrop Grumman will provide mission system integration and the Prism autonomous software, while Kratos will deliver the XQ-58 drone, which is designed for expeditionary operations [2][3] Group 2: Technical Specifications and Capabilities - The XQ-58 has a range exceeding 3,000 nautical miles (5,556 kilometers), a cruising speed close to Mach 0.86, and can operate at altitudes up to 45,000 feet (13,716 meters) [4] - The drone's design allows it to carry significant sensor and weapon payloads while being more cost-effective and smaller than traditional manned fighter jets [4][5] Group 3: Operational Flexibility - The XQ-58's launch and recovery methods are designed to minimize reliance on fixed infrastructure, aligning with the Marine Corps' expeditionary warfare theory [4][5] - The aircraft can adapt its operations based on environmental conditions, allowing for both conventional recovery and forward base launches [5] Group 4: Strategic Implications - The MUX TACAIR CCA project represents a strategic adjustment in U.S. air power to counter peer competitors by utilizing low-cost drones to gather intelligence and disrupt enemy defenses [7][8] - The modular architecture and open autonomous framework of the XQ-58 support rapid iterations and integration of new technologies as threats evolve [7][8]

Core Insights - The company has demonstrated strong operational performance in Q3, with a record backlog of $85 billion, indicating confidence in future growth [4][15] - Revenue increased by 6% year-to-date, with a full-year guidance of 5% growth, driven by disciplined business pursuits and cost efficiencies [3][5] - The company is increasing its EPS guidance by $0.75, reflecting solid year-to-date results and a focus on productivity and efficiency initiatives [2] Financial Performance - Free cash flow for the quarter was $730 million, aligning with expectations and providing flexibility for capital deployment [2][21] - Segment operating margins improved to 11.5%, the highest in over two years, driven by solid sales volume and operational performance [3][19] - Earnings per share increased by 13% to $7, supported by strong segment performance and favorable tax rates [20] Business Segments - The Aeronautics segment is expected to achieve sales of approximately $12 billion, reflecting an 11% year-over-year increase, with an operating margin rate guidance of around 10% [22] - Defense Systems (DS) is projected to have a sales range in the high $8 billion, with a mid-single-digit growth rate, while Mission Systems (MS) is expected to see margins improve to high 13% [22][23] - The Space segment anticipates a mid-single-digit decline due to program wind-downs, but margin rates are expected to improve to the mid- to high 10% range [23] Market Demand and Strategy - There is robust international demand for defense capabilities, particularly in Europe, with NATO members increasing defense spending [10][8] - The company expects international sales to grow faster than domestic sales over the next several years, with a book-to-bill ratio of almost two times in Q3 [9][10] - The company is focused on delivering technical innovations, such as the Glide Phase Interceptor program, to address evolving defense needs [10][11] Future Outlook - The company projects sales growth between 3% and 4% for 2025, with expectations for continued margin expansion driven by favorable macro trends and program performance [11][28] - Free cash flow is expected to grow by over 20% year-over-year in 2025, with plans to return approximately 100% of free cash flow to shareholders [12][28] - The company remains confident in its strategy to create value for customers and shareholders, with a focus on profitable growth and capital deployment [28][29]

Core Viewpoint - The U.S. Southern Command confirmed a maritime strike against a suspected drug-trafficking vessel, marking a significant escalation in operations following the capture of Venezuelan leader Nicolás Maduro [1][6]. Group 1: Strike Details - The strike occurred on January 23, targeting a vessel identified as operating along known narco-trafficking routes in the Eastern Pacific, resulting in two fatalities and one survivor who received rescue assistance [2][3]. - The operation was part of a broader maritime campaign aimed at disrupting drug trafficking across the Caribbean and Eastern Pacific [4]. Group 2: Rising Strike Count - Since early September, U.S. forces have conducted 36 maritime strikes against suspected smuggling vessels, leading to at least 117 fatalities in regional waters [5]. - The most recent strikes prior to this incident occurred in late December, where five boats were targeted, resulting in eight deaths [5]. Group 3: Caribbean Focus - The majority of confirmed strikes have taken place in the Caribbean Sea, attributed to high trafficking volumes and established routes [6]. - The capture of Maduro and his wife on January 3 was part of a broader anti-drug operation, with U.S. officials denying claims that these missions are a cover for regime change [6]. Group 4: Political Commentary - President Donald Trump stated that the strikes have significantly reduced maritime drug flows, claiming that nearly 100% of drugs coming in by water have been stopped [7][8]. - Defense contractors like Lockheed Martin Corp. and Northrop Grumman Corp. are closely associated with U.S. military operations, indicating potential implications for the defense industry [8].