Northrop Q3 Sales Up 2%; Record Backlog of $85B Posted

Northrop Grumman generated $10 billion in sales during the third quarter of 2024, up 2 percent from the same period last year, and posted $11.7 billion in Q3 net awards with a record backlog of $85 billion.

In an earnings release published Thursday, the Falls Church, Virginia-based aerospace and defense contractor said year-to-date sales rose 6 percent and Q3 net earnings totaled $1 billion with a diluted earnings per share of $7, up 13 percent from the prior-year period.

Financial Results of 4 Northrop Business Segments

Northrop’s defense systems segment saw its Q3 sales climb 2 percent to $2.1 billion, driven by a ramp-up on the Stand-in Attack Weapon program and higher volume on Sentinel and certain military ammunition programs.

The contractor’s mission systems business logged $2.8 billion in third-quarter sales, up 7 percent from the same period the previous year. The increase was attributed to higher volume on restricted advanced microelectronics and technology initiatives and Ground/Air Task Oriented Radar, or G/ATOR system, due to continued ramp-up on full-production awards.

Space systems revenue for the quarter dropped 3 percent to approximately $2.8 billion due to the winding down of work on the restricted space and Next Generation Interceptor programs.

The aeronautics systems business segment reported $2.9 billion in Q3 sales, up 4 percent from the prior-year period. The company attributed the growth to higher F-35 production volume, increased sustainment and modernization work on the E-2 fleet, rise in Global Hawk sustainment activities and higher Triton low rate initial production volume.

CEO on Glide Phase Interceptor, Sentinel Programs

At an earnings call Thursday, Kathy Warden, chairman, CEO and president of Northrop, discussed the Missile Defense Agency’s selection of the company to continue development work on the Glide Phase Interceptor program, or GPI.

Under GPI, Northrop will continue to build a defensive countermeasure against hypersonic weapons. The program is a partnership between the U.S. and Japan.

“We are starting with a piece of work that will continue what we have been doing around risk reduction and design and move to a more mature design in this next phase, getting eventually to a preliminary design review,” the chief executive said of the GPI program.

“And then after that, we will move to the next phase of the program. So it is an incremental funding approach, but this down select was important because it signifies that missile defense agency, like their design, and wants to continue in the development process with us.”

As for Sentinel, the company and the U.S. Air Force have begun the restructuring process for the intercontinental ballistic missile program.

“That restructure process has started. It has not concluded. We expect it to continue well into next year. And yet we have looked at what we believe is most likely to happen as we do on any of our programs and incorporated that into our estimates,” the 2024 Wash100 awardee added.

In early July, the Department of Defense certified that the Sentinel program met the statutory criteria to continue following a comprehensive review under the Nunn-McCurdy process.

2024 Guidance

Northrop reaffirmed its full-year 2024 sales guidance, forecasting revenue in the range of $41 billion to $41.4 billion.

The company raised the lower end of its 2024 segment operating income guidance and increased its MTM-adjusted earnings per share by 75 cents to $25.65 to $26.05.

“Based on the strength of our year-to-date results and our positive outlook for the future, we are once again raising our 2024 guidance. Sales remain on target for 5% growth this year and the deliberate actions we are taking to improve margin rates have resulted in further expansion this quarter,” Warden said.

“As we look toward 2025, our outlook includes continued top line growth, margin rate expansion and greater than 20% free cash flow growth,” added the chair of Northrop’s board of directors.