Northrop Grumman Misses Q1 Earnings Estimates, Lowers '25 EPS View

Core Viewpoint - Northrop Grumman Corporation (NOC) reported disappointing first-quarter 2025 financial results, with adjusted earnings and total sales missing consensus estimates, primarily due to increased manufacturing costs and lower sales in key segments [1][3][2]. Financial Performance - Adjusted earnings for Q1 2025 were $6.06 per share, missing the Zacks Consensus Estimate of $6.21 by 2.4% [1] - GAAP earnings were reported at $3.32 per share, down from $6.32 in the same quarter last year [1] - Total sales amounted to $9.47 billion, falling short of the Zacks Consensus Estimate of $9.91 billion by 4.4% and declining 6.6% from $10.13 billion year-over-year [3] Segment Performance - Aeronautics Systems: Sales decreased 7.6% to $2.81 billion, with an operating loss of $183 million compared to an operating income of $306 million in Q1 2024 [5] - Mission Systems: Sales increased 5.6% to $2.81 billion, but operating income decreased 4.5% to $361 million [6] - Defense Systems: Sales rose 3.9% to $1.81 billion, with operating income improving 14.7% to $179 million [7] - Space Systems: Sales declined 18.5% to $2.57 billion, with operating income decreasing 14.2% to $283 million [8] Operational Metrics - Total operating income for the quarter was $573 million, significantly down from $1,071 million in the prior-year quarter [10] - The company's total backlog increased to $92.80 billion from $91.47 billion at the end of Q4 2024 [4] Financial Condition - Cash and cash equivalents as of March 31, 2025, were $1.69 billion, down from $4.35 billion at the end of 2024 [11] - Long-term debt decreased to $14.17 billion from $14.69 billion [11] - Net cash outflow from operating activities was $1.57 billion, compared to $0.71 billion a year ago [11] Guidance - Northrop Grumman expects revenues for 2025 to be in the range of $42.00-$42.50 billion, with a consensus estimate of $42.27 billion [12] - Adjusted earnings guidance was lowered to a range of $24.95-$25.35 per share, down from the previous guidance of $27.85-$28.25 [13] - The company still projects adjusted free cash flow between $2.85-$3.25 billion [13]