Northrop Grumman(NOC) - 2024 Q4 - Annual Results

Financial Performance - Fourth quarter 2024 sales were $10.7 billion, comparable to Q4 2023, with full-year sales increasing 4% to $41.0 billion from $39.3 billion in 2023[2]. - Fourth quarter 2024 net earnings were $1.3 billion, or $8.66 per diluted share, while full-year net earnings reached $4.2 billion, or $28.34 per diluted share[3]. - Total sales for 2024 reached $41,033 million, an increase from $39,290 million in 2023, representing a growth of approximately 4.4%[64]. - Operating income for 2024 was $4,370 million, significantly higher than $2,537 million in 2023, marking an increase of 72.5%[64]. - Net earnings for 2024 were $4,174 million, compared to $2,056 million in 2023, reflecting a growth of 102%[64]. - Basic earnings per share for 2024 were $28.39, up from $13.57 in 2023, indicating a year-over-year increase of 109%[64]. Cash Flow and Shareholder Returns - Operating cash flow for 2024 was $4.4 billion, with free cash flow of $2.6 billion, representing a 25% increase from the previous year[4]. - The company returned $3.7 billion to shareholders through share repurchases and dividends in 2024[4]. - Cash provided by operating activities increased by $148 million, or 6 percent, in the fourth quarter 2024[20]. - The company reported a net cash provided by operating activities of $4,388 million in 2024, compared to $3,875 million in 2023, an increase of 13.2%[71]. - The company repurchased common stock worth $2,514 million in 2024, compared to $1,500 million in 2023, indicating a 67.6% increase[71]. Sales Growth and Segment Performance - 2024 sales growth was driven by a 12% increase in Aeronautics Systems, with total sales growth of $1.7 billion attributed to higher sales in Mission and Defense Systems[11]. - Fourth quarter 2024 sales for Aeronautics Systems increased by $310 million, or 11 percent, driven by B-21 production[28]. - Fourth quarter 2024 sales for Defense Systems increased by $102 million, or 5 percent, primarily due to the ramp-up on Sentinel[33]. - Fourth quarter 2024 sales for Mission Systems increased by $81 million, or 3 percent, due to higher volume on advanced microelectronics programs[38]. - Fourth quarter 2024 sales for Space Systems decreased by $388 million, or 13 percent, primarily due to the wind-down of restricted space programs[44]. Backlog and Future Guidance - The company reported a book-to-bill ratio of 1.23 and a record backlog of $91.5 billion[4]. - Fourth quarter 2024 net awards totaled $17.3 billion, with a backlog of $91.5 billion[21]. - The company projects 2025 sales guidance between $42,000 million and $42,500 million, with segment operating income expected between $4,650 million and $4,800 million[51]. - Free cash flow guidance for 2025 is estimated to be between $2,850 million and $3,250 million[51]. - Aeronautics Systems segment sales are projected to be in the low $13 billion range, with an operating margin rate of approximately 9%[51]. - Defense Systems segment sales are expected to be in the low $8 billion range, also with an operating margin rate of around 9%[51]. - Mission Systems segment sales are anticipated to be around $12 billion, with a higher operating margin rate of 14%[51]. Operational Efficiency - The operating margin rate improved to 10.6% in 2024, up from 6.5% in 2023, reflecting a significant increase in operating income[13]. - Fourth quarter 2024 segment operating income increased by $1.6 billion, with a segment operating margin rate of 11.2 percent[1]. - The fourth quarter 2024 operating income increased by $1.5 billion, primarily due to higher income at Aeronautics Systems[12]. Tax and Financial Position - The effective tax rate (ETR) for the fourth quarter 2024 decreased to 18.5 percent from 29.3 percent in the fourth quarter of 2023[15]. - Total assets increased to $49,359 million in 2024 from $46,544 million in 2023, representing a growth of 6.1%[68]. - Long-term debt increased to $14,692 million in 2024 from $13,786 million in 2023, reflecting a rise of 6.6%[71]. - Total current liabilities increased to $14,128 million in 2024 from $11,942 million in 2023, a rise of 18.3%[71]. - Retained earnings grew to $15,297 million in 2024 from $14,773 million in 2023, an increase of 3.5%[71]. Risks and Strategic Changes - The company acknowledges potential risks including inflationary pressures, labor shortages, and supply chain challenges that may impact future performance[58]. - The company plans to realign the Strike and Surveillance Aircraft Solutions business unit from Defense Systems to Aeronautics Systems effective January 1, 2025[25]. - The company plans to realign its segments effective July 1, 2024, which will impact future reporting[84]. - Further realignment is scheduled for January 1, 2025, affecting the Strike and Surveillance Aircraft Solutions business unit[85]. - The company emphasizes the importance of free cash flow for planning acquisitions, dividends, and stock repurchases[90]. - Organic sales growth is highlighted as a key measure, excluding sales from the Training Services business[91].