Northrop Grumman(NOC) - 2024 Q2 - Quarterly Report

Financial Performance - Second quarter 2024 sales increased by $642 million, or 7%, driven by higher sales across all four sectors, with Aeronautics Systems growing by 14%[99] - Year-to-date 2024 sales rose by$ 1.5 billion, or 8%, with Aeronautics Systems showing a 16% increase[101] - Second quarter 2024 operating income increased by $123 million, or 13%, with an operating margin rate of 10.7%, up from 10.1%[102] - Year-to-date 2024 operating income rose by$ 247 million, or 13%, with an operating margin rate of 10.6%, compared to 10.1% in the prior year[103] - Second quarter 2024 net earnings increased by $128 million, or 16%, primarily due to higher operating income[104] - Year-to-date 2024 net earnings rose by$ 230 million, or 14%, driven by increased operating income and a higher non-operating FAS pension benefit[104] - Second quarter 2024 diluted earnings per share increased by 19%, reflecting a 16% rise in net earnings[105] - Year-to-date 2024 diluted earnings per share increased by 17%, supported by a 14% increase in net earnings[105] Segment Performance - Second quarter 2024 segment operating income increased by $49 million, or 5%, primarily due to higher sales[112] - Year to date 2024 segment operating income increased by$ 151 million, or 7%, primarily due to higher sales[113] - Second quarter 2024 sales increased by $368 million, or 14%, driven by higher restricted sales and increased F-35 sustainment and production work[118] - Year to date 2024 sales increased by$ 822 million, or 16%, primarily due to higher restricted sales and increased volume on various programs[119] - Defense Systems segment sales increased by $93 million, or 7%, primarily due to ramp-up on military ammunition programs[123] - Mission Systems segment sales increased by$ 132 million, or 5%, primarily due to higher volume on restricted advanced microelectronics programs[129] - Space Systems segment sales increased by $85 million, or 2%, with an operating income increase of$ 41 million, or 14%[134] Cash Flow and Backlog - The company had $3.3 billion in cash and cash equivalents as of June 30, 2024, with no borrowings outstanding under its credit facilities[155] - As of June 30, 2024, total backlog was$ 83.118 billion, a decrease of 1% from $84.230 billion as of December 31, 2023[154] - Year-to-date 2024 net cash provided by operating activities reached$ 719 million, up 231% from $217 million in the same period last year[159] - Free cash flow for the first half of 2024 was$ 129 million, a significant increase of 133% compared to a negative $396 million in the same period of 2023[161] - Year-to-date 2024 capital expenditures were$ 590 million, slightly down by 4% from $613 million in the same period of 2023[161] - Year-to-date 2024 net cash used in investing activities decreased by$ 22 million, or 4%, compared to the same period in 2023, primarily due to lower capital expenditures[162] - Year-to-date 2024 net cash provided by financing activities decreased by $1.2 billion, or 97%, compared to the same period in 2023, mainly due to increased share repurchases[163] Market and Economic Environment - The ongoing global security environment, including conflicts in Ukraine and the Middle East, is expected to drive increased demand for defense products and services[92] - The global economic environment has faced challenges such as inflation and supply chain disruptions, impacting costs and performance[94] - The company expects a reduction of approximately$ 350 million in cash from operations for 2024 due to federal tax payments related to IRC Section 174[159] - The ongoing conflict in Ukraine has increased demand for certain goods and services, although the company does not anticipate significant adverse financial impacts directly from the conflict[92] Risks and Challenges - Forward-looking statements indicate potential risks including dependence on U.S. government funding and macroeconomic pressures[167] - Company faces significant risks related to supply chain disruptions and inflationary pressures impacting costs and performance[173] - Legal and regulatory risks include investigations and compliance with procurement laws and regulations[173] - The company is exposed to risks from international operations, including geopolitical and economic factors[173] - Future investment performance of plan assets and changes in marketable securities valuation are potential risk factors[173] - The company has not reported any material changes to market risks since the 2023 Annual Report on Form 10-K[169] Innovation and Workforce - The company is focused on innovation and developing new technologies to meet customer needs and enhance competitive positioning[91] - The company emphasizes the importance of innovation and development of new products and technologies to meet customer needs[173] - The company is focused on attracting and retaining a qualified workforce to meet performance obligations[173]