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Northrop Grumman — Jan 30, 2025 release

Fiscal 2024 fourth-quarter results · 8-K Item 2.02 · Exhibit 99.1 · 0001133421-25-000005
Open on SEC.gov ↗
Showing in the filing
Aeronautics Systems Sales ($B)
“Low $13”
Period
FY2025
Measure
Company-defined measure
Source
Guidance table
All guidance in this release · 15
Margin expansion for FY2025
“margin expansion”
Training Services divestiture close timing for FY2025
“expected to close mid-year”
Sales for FY2025
“$42,000 — $42,500”
Segment operating income for FY2025
“$4,650 — $4,800”
MTM-adjusted EPS for FY2025
“$27.85 — $28.25”
Free cash flow for FY2025
“$2,850 — $3,250”
Aeronautics Systems Sales ($B) for FY2025
“Low $13”
Defense Systems Sales ($B) for FY2025
“Low $8”
Aeronautics Systems OM Rate % for FY2025
“Mid to High 9%”
Mission Systems Sales ($B) for FY2025
“~$12”
Mission Systems OM Rate % for FY2025
“Mid 14%”
Space Systems Sales ($B) for FY2025
“~$11”
Space Systems OM Rate % for FY2025
“High 10%”
Intersegment Eliminations Sales ($B) for FY2025
“~($2.1)”
Intersegment Eliminations OM Rate % for FY2025
“High 13%”
Exhibit 99.1 · full document
EARNINGS RELEASE Document Exhibit 99 News Release Contact: Kate Mauss (Media) 410-832-6792   katherine.mauss@ngc.com     Todd Ernst (Investors)   703-280-4535   todd.ernst@ngc.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results • Strong 2024 financial results that met or exceeded company-level financial guidance: ◦ Book to bill ratio of 1.23; backlog rises to new record of $91.5 billion ◦ Sales increase 4.4 percent to $41.0 billion ◦ Operating margin rate of 10.6 percent; segment operating margin rate 1 of 11.1 percent ◦ Diluted EPS of $28.34; Mark-to-Market (MTM)-adjusted EPS 1 of $26.08 ◦ Operating cash flow of $4.4 billion; free cash flow 1 of $2.6 billion ◦ Returned $3.7 billion of cash to shareholders through share repurchases and dividends • 2025 financial guidance in line with prior outlook, including continued organic sales 1 growth, margin expansion, and double digit free cash flow 1 growth ◦ Includes divestiture of Training Services business, expected to close mid-year FALLS CHURCH, Va. – January 30, 2025 – Northrop Grumman Corporation (NYSE: NOC) reported fourth quarter 2024 sales of $10.7 billion were comparable with the fourth quarter of 2023. Sales increased 4 percent to $41.0 billion in 2024, as compared with $39.3 billion in 2023. 2024 sales reflect continued strong demand for our products and services. Fourth quarter 2024 net earnings totaled $1.3 billion, or $8.66 per diluted share, and 2024 net earnings were $4.2 billion, or $28.34 per diluted share. Excluding the after-tax MTM benefit of $332 million, fourth quarter 2024 MTM-adjusted net earnings 1 totaled $932 million, or $6.39 per diluted share, and 2024 MTM-adjusted net earnings 1 totaled $3.8 billion, or $26.08 per diluted share. “Our team had another outstanding year equipping the U.S. and our allies with the advanced technologies they need to lead globally and maintain peace through strength,” said Kathy Warden, chair, chief executive officer and president. “Our financial results and new record backlog reflect the relevance of our products and the importance of our work. Over the last five years our sales have grown 30% organically and our free cash flow expanded 25% in 2024. Our guidance anticipates continued top line growth, margin expansion, and double digit cash flow growth. Northrop Grumman remains committed to leading the way in technology innovation for national security.” 1 Non-GAAP measure - see definitions at the end of this earnings release. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 2 MTM-adjusted Net Earnings and EPS 1 Net earnings for the fourth quarter and full year 2024 were increased by a $332 million after-tax MTM benefit. The MTM benefit relates to pension and other post-retirement benefits (OPB) actuarial gains and losses, which the company recognizes immediately through earnings upon annual remeasurement of the assets and projected benefit obligations of our pension and OPB plans. MTM-adjusted earnings 1 and EPS 1 are the measures the company uses to compare performance to prior periods and for EPS guidance. The table below reconciles net earnings and diluted EPS to MTM-adjusted net earnings 1 and MTM-adjusted diluted EPS 1 :   Three Months Ended December 31 Year Ended December 31 $ in millions, except per share amounts 2024 2023 2024 2023 MTM-adjusted net earnings (loss) Net earnings (loss) 4 $ 1,264   $ (535) $ 4,174   $ 2,056  MTM (benefit) expense (443) 422  (443) 422  MTM-related deferred state tax expense (benefit) 2 23   (22) 23   (22) Federal tax expense (benefit) of items above 3 88   (84) 88   (84) MTM (benefit) expense, net of tax $ (332) $ 316  $ (332) $ 316  MTM-adjusted net earnings (loss) 1,4 $ 932   $ (219) $ 3,842   $ 2,372  MTM-adjusted per share data Diluted EPS 4 $ 8.66   $ (3.54) $ 28.34   $ 13.53  MTM (benefit) expense per share (3.03) 2.80  (3.02) 2.78  MTM-related deferred state tax expense (benefit) per share 2 0.16   (0.15) 0.16   (0.14) Federal tax expense (benefit) of items above per share 3 0.60   (0.56) 0.60   (0.56) MTM (benefit) expense, net of tax, per share $ (2.27) $ 2.09  $ (2.26) $ 2.08  MTM-adjusted diluted EPS 1,4 $ 6.39   $ (1.45) $ 26.08   $ 15.61  1  Non-GAAP measure — see definitions at the end of this earnings release. 2  The deferred state tax impact in each period was calculated using the company’s blended state tax rate of 5.25 percent. 3  The federal tax impact in each period was calculated by subtracting the deferred state tax impact from MTM (benefit) expense and applying the 21 percent federal statutory rate. 4  Fourth quarter and full year 2023 results include an after-tax charge on the B-21 program of $1.17 billion ($7.72 per diluted share for the fourth quarter and $7.68 per diluted share for the full year). Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 3 Consolidated Operating Results and Cash Flows Three Months Ended December 31 Year Ended December 31 $ in millions, except per share amounts 2024 2023 Change 2024 2023 Change Sales Aeronautics Systems $ 3,220   $ 2,910  11% $ 12,030   $ 10,786  12% Defense Systems 2,333   2,231  5% 8,560   8,289  3% Mission Systems 3,144   3,063  3% 11,399   10,895  5% Space Systems 2,710   3,098  (13%) 11,731   11,873  (1%) Intersegment eliminations (721) (664) (2,687) (2,553) Total sales 10,686   10,638  —% 41,033   39,290  4% Operating income (loss) Aeronautics Systems 292   (1,271) NM 1,182   (473) NM Defense Systems 252   224  13% 866   829  4% Mission Systems 469   462  2% 1,598   1,609  (1%) Space Systems 275   290  (5%) 1,254   1,130  11% Intersegment eliminations (95) (88) (356) (335) Segment operating income (loss) 1 1,193   (383) NM 4,544   2,760  65% Segment operating margin rate 1 11.2   % (3.6  %) NM 11.1   % 7.0  % 410 bps FAS/CAS operating adjustment 8   (20) NM 40   (82) NM Unallocated corporate (expense) income: Intangible asset amortization and PP&E step-up depreciation (25) (30) (17%) (97) (122) (20%) Deferred state tax (expense) benefit of MTM adjustment (23) 22  NM (23) 22  NM Deferred state tax benefit of B-21 charge —   82  NM —   82  NM Other unallocated corporate expense (64) (64) —% (94) (123) (24%) Unallocated corporate (expense) income (112) 10  NM (214) (141) 52% Total operating income (loss) $ 1,089   $ (393) NM $ 4,370   $ 2,537  72% Operating margin rate 10.2   % (3.7  %) NM 10.6   % 6.5  % 410 bps Interest expense (160) (128) 25% (621) (545) 14% Non-operating FAS pension benefit 153   133  15% 656   530  24% Mark-to-market pension and OPB benefit (expense) 443   (422) NM 443   (422) NM Other, net 26   53  (51%) 168   246  (32%) Earnings (loss) before income taxes 1,551   (757) NM 5,016   2,346  114% Federal and foreign income tax expense (benefit) 287   (222) NM 842   290  190% Effective income tax rate 18.5   % 29.3  % NM 16.8   % 12.4  % 440 bps Net earnings (loss) $ 1,264   $ (535) NM $ 4,174   $ 2,056  103% Diluted earnings (loss) per share 8.66   (3.54) NM 28.34   13.53  109% Weighted-average diluted shares outstanding, in millions 145.9   151.1  (3%) 147.3   152.0  (3%) Net cash provided by operating activities $ 2,578   $ 2,430  6% $ 4,388   $ 3,875  13% Capital expenditures (816) (803) 2% (1,767) (1,775) —% Free cash flow 1 $ 1,762   $ 1,627  8% $ 2,621   $ 2,100  25% 1 Non-GAAP measure - see definitions at the end of this earnings release. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 4 Sales Fourth quarter 2024 sales were comparable to the prior year period and reflect higher sales at Aeronautics Systems, Defense Systems and Mission Systems, offset by lower sales at Space Systems largely driven by a reduction of $231 million associated with wind-down of work on the restricted space and NGI programs, as previously disclosed. 2024 sales increased $1.7 billion, or 4 percent, due to a 12 percent growth in sales at Aeronautics Systems and higher sales at Mission Systems and Defense Systems, partially offset by lower sales at Space Systems largely driven by a reduction of $595 million associated with wind-down of work on the restricted space and NGI programs, as previously disclosed. Operating Income and Margin Rate Fourth quarter 2024 operating income increased $1.5 billion primarily due to higher operating income at Aeronautics Systems largely driven by the prior year $1.56 billion charge on the B-21 program, as well as higher operating income at Defense Systems. These increases were partially offset by $122 million of higher unallocated corporate expense, largely due to a $127 million increase in deferred state tax expense related to the MTM benefit (expense) and prior year B-21 charge. Fourth quarter 2024 operating margin rate increased to 10.2 percent from (3.7) percent reflecting the items above. 2024 operating income increased $1.8 billion, or 72 percent, primarily due to higher operating income at Aeronautics Systems, largely driven by the prior year $1.56 billion charge on the B-21 program, as well as higher operating income at Space Systems and Defense Systems. 2024 operating income also increased due to a $122 million increase in the FAS/CAS operating adjustment, partially offset by $73 million of higher unallocated corporate expense, largely due to a $127 million increase in deferred state taxes related to the MTM benefit (expense) and prior year B-21 charge and $25 million of lower intangible amortization and PP&E step-up depreciation. 2024 operating margin rate increased to 10.6 percent from 6.5 percent reflecting the items above. Segment Operating Income and Margin Rate 1 Fourth quarter 2024 segment operating income 1 increased $1.6 billion primarily due to the prior year B-21 charge at Aeronautics Systems, as well as higher operating income at Defense Systems. Segment operating margin rate 1 increased to 11.2 percent reflecting higher operating margin rates at Aeronautics Systems, Space Systems and Defense Systems. 2024 segment operating income 1 increased $1.8 billion, or 65 percent, primarily due to the prior year B-21 charge at Aeronautics Systems, as well as higher operating income at Space Systems and Defense Systems. Segment operating margin rate 1 increased to 11.1 percent reflecting higher operating margin rates at Aeronautics Systems and Space Systems, partially offset by a lower operating margin rate at Mission Systems. Federal and Foreign Income Taxes The company’s fourth quarter 2024 effective tax rate (ETR) decreased to 18.5 percent from 29.3 percent in the fourth quarter of 2023 primarily due to the impact of the prior year B-21 charge and the MTM adjustment. The 2024 MTM benefit increased the fourth quarter 2024 ETR by 0.9 percentage points, whereas the prior year B-21 charge and MTM expense collectively increased the fourth quarter 2023 ETR by 14.0 percentage points. The fourth quarter 2024 ETR also reflects lower deductions for foreign derived intangible income (FDII) and higher interest expense on unrecognized tax benefits, partially offset by higher benefits associated with research credits. 1 Non-GAAP measure - see definitions at the end of this earnings release. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 5 The 2024 effective tax rate (ETR) increased to 16.8 percent from 12.4 percent in 2023 primarily due to the impact of the prior year B-21 charge and the MTM adjustment on our ETR. The 2024 MTM benefit increased the 2024 ETR by 0.4 percentage points, whereas the prior year B-21 charge and MTM expense collectively reduced the 2023 ETR by 3.8 percentage points. The 2024 ETR also reflects a net reduction in tax reserves largely due to a recent federal court decision, partially offset by higher interest expense on unrecognized tax benefits. Net Earnings Fourth quarter 2024 net earnings increased $1.8 billion, primarily due to $1.5 billion of higher operating income and an $865 million increase in our MTM benefit (expense), partially offset by a $509 million increase in income tax expense and $32 million of higher interest expense on our long-term debt. 2024 net earnings increased $2.1 billion, or 103 percent, primarily due to $1.8 billion of higher operating income, an $865 million increase in our MTM benefit (expense), and a $126 million increase in the non-operating FAS pension benefit. These increases were partially offset by a $552 million increase in income tax expense, a $97 million gain recognized in the prior year upon the sale of our minority investment in an Australian business, and $76 million of higher interest expense on our long-term debt. Cash Flows Fourth quarter 2024 cash provided by operating activities increased $148 million, or 6 percent, and fourth quarter 2024 free cash flow 1 increased $135 million, or 8 percent, principally due to improved trade working capital driven by the timing of supplier payments and an increase in customer advances, partially offset by higher tax payments. 2024 cash provided by operating activities increased $513 million, or 13 percent, and 2024 free cash flow 1 increased $521 million, or 25 percent, principally due to improved trade working capital, largely driven by lower net tax payments, as well as higher net earnings. Awards and Backlog Fourth quarter 2024 and year to date 2024 net awards totaled $17.3 billion and $50.6 billion, respectively, and backlog totaled $91.5 billion. Significant fourth quarter new awards include $4.0 billion for restricted programs (primarily at Aeronautics Systems, Space Systems, and Mission Systems), $3.5 billion for the Take Charge and Move Out (TACAMO) mission, $1.9 billion for F-35 (primarily at Aeronautics Systems), $1.7 billion for the Next-Generation Overhead Persistent Infrared (Next-Gen OPIR) Polar program, $0.9 billion for the Poland Integrated Battle Command System (IBCS) program, and $0.5 billion for E-2. Significant 2024 new awards include $11.8 billion for restricted programs (primarily at Aeronautics Systems, Mission Systems, and Space Systems), $3.5 billion for TACAMO, $3.5 billion for F-35 (primarily at Aeronautics Systems), $2.4 billion for E-2, $1.8 billion for Next-Gen OPIR Polar, $0.9 billion for Poland IBCS, and $0.8 billion for certain military ammunition programs. Segment Operating Results Effective July 1, 2024, the company realigned the Strategic Deterrent Systems (SDS) division, which includes the Sentinel program, from Space Systems to Defense Systems. This realignment is reflected in the financial information contained in this report. 1 Non-GAAP measure - see definitions at the end of this earnings release. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 6 Effective January 1, 2025, the company realigned the Strike and Surveillance Aircraft Solutions ( SSAS) business unit from Defense Systems to Aeronautics Systems. This realignment is not reflected in the financial information contained in this release (except as it pertains to the company’s 2025 guidance). The realignment will be reflected in the company’s operating results beginning in the first quarter of 2025. Recast financial information reflecting these two realignments for current and certain prior periods is presented in Schedule 6 of this release. AERONAUTICS SYSTEMS Three Months Ended December 31 % Year Ended December 31 % $ in millions 2024 2023 Change 2024 2023 Change Sales $ 3,220 $ 2,910 11   % $ 12,030 $ 10,786 12   % Operating income (loss) 292 (1,271) NM 1,182 (473) NM Operating margin rate 9.1   % (43.7) % 9.8   % (4.4) % Sales Fourth quarter 2024 sales increased $310 million, or 11 percent, primarily due to the continuing transition to production on B-21 driving higher restricted volume and a $134 million increase on F-35 production programs largely driven by the timing of materials. 2024 sales increased $1.2 billion, or 12 percent, primarily due to the continuing transition to production on B-21 driving higher restricted volume, a $448 million increase in F-35 production and sustainment volume due, in part, to the timing of materials, a $134 million increase in Triton LRIP production volume, a $134 million increase in E-2 fleet sustainment and modernization work, and higher volume on Global Hawk sustainment activities. Operating Income Fourth quarter 2024 operating income increased $1.6 billion due to the prior year $1.56 billion charge on the B-21 program. Operating margin rate increased to 9.1 percent principally due to the prior year B-21 charge, partially offset by sales growth on low margin restricted programs. 2024 operating income increased $1.7 billion primarily due to the prior year $1.56 billion charge on the B-21 program as well as higher sales. Operating margin rate increased to 9.8 percent principally due to the prior year B-21 charge. DEFENSE SYSTEMS Three Months Ended December 31 % Year Ended December 31 % $ in millions 2024 2023 Change 2024 2023 Change Sales $ 2,333 $ 2,231 5   % $ 8,560 $ 8,289 3   % Operating income 252 224 13   % 866 829 4   % Operating margin rate 10.8   % 10.0  % 10.1   % 10.0  % Sales Fourth quarter 2024 sales increased $102 million, or 5 percent, primarily due to continued ramp-up on Sentinel and higher volume on certain military ammunition programs, partially offset by lower volume due to the completion of an international training program. 1 Non-GAAP measure - see definitions at the end of this earnings release. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 7 2024 sales increased $271 million, or 3 percent, primarily due to a $182 million increase on Sentinel as that program continues to ramp, a $163 million increase on certain military ammunition programs, a $124 million increase on Stand-in Attack Weapon (SiAW) as the program ramps and higher volume from timing of materials and increased order quantities on the Guided Multiple Launch Rocket System (GMLRS) program. These increases were partially offset by a $262 million decrease due to the completion of an international training program and lower volume on the Special Electronic Mission Aircraft (SEMA) program as it nears completion. Operating Income Fourth quarter 2024 operating income increased $28 million, or 13 percent, due to a higher operating margin rate and higher sales. Operating margin rate increased to 10.8 percent from 10.0 percent principally due to higher net EAC adjustments. 2024 operating income increased $37 million, or 4 percent, primarily due to higher sales. Operating margin rate was comparable to the prior period. MISSION SYSTEMS Three Months Ended December 31 % Year Ended December 31 % $ in millions 2024 2023 Change 2024 2023 Change Sales $ 3,144 $ 3,063 3   % $ 11,399 $ 10,895 5   % Operating income 469 462 2   % 1,598 1,609 (1) % Operating margin rate 14.9   % 15.1  % 14.0   % 14.8  % Sales Fourth quarter 2024 sales increased $81 million, or 3 percent, primarily due to higher volume on restricted advanced microelectronics and technology programs, as well as higher volume on communications, electronic warfare self-protection and targeting systems programs. These increases were partially offset by lower sales on restricted airborne radar programs. 2024 sales increased $504 million, or 5 percent, primarily due to higher volume on restricted advanced microelectronics and technology programs, increased marine systems sales due, in part, to the timing of materials, and higher Ground/Air Task Oriented Radar (G/ATOR) volume due to continued ramp-up on full-rate production (FRP) awards. These increases were partially offset by lower sales on restricted airborne radar programs and the Scalable Agile Beam Radar (SABR) program. Operating Income Fourth quarter 2024 operating income increased $7 million, or 2 percent, primarily due to higher sales. Operating margin rate decreased to 14.9 percent from 15.1 percent principally driven by lower margin rates on certain airborne radar programs and changes in contract mix toward more cost-type content, which more than offset higher net EAC adjustments. 2024 operating income decreased $11 million, or 1 percent, due to a lower operating margin rate, partially offset by higher sales. Operating margin rate decreased to 14.0 percent from 14.8 percent primarily due to lower net EAC adjustments on certain airborne radar production programs due, in part, to production inefficiencies that have driven higher labor costs, as well as changes in contract mix toward more cost-type content. These decreases were partially offset by sales growth on higher margin advanced microelectronics programs. 1 Non-GAAP measure - see definitions at the end of this earnings release. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 8 SPACE SYSTEMS Three Months Ended December 31 % Year Ended December 31 % $ in millions 2024 2023 Change 2024 2023 Change Sales $ 2,710 $ 3,098 (13) % $ 11,731 $ 11,873 (1) % Operating income 275 290 (5) % 1,254 1,130 11   % Operating margin rate 10.1   % 9.4  % 10.7   % 9.5  % Sales Fourth quarter 2024 sales decreased $388 million, or 13 percent, primarily due to wind-down of work on the restricted space and NGI programs, which reduced sales by $231 million, as well as lower volume on a restricted program and Next-Gen OPIR and the Glide Phase Interceptor program, largely due to timing. 2024 sales decreased $142 million, or 1 percent, primarily due to wind-down of work on the restricted space and NGI programs, which reduced sales by $595 million. This reduction was partially offset by a $302 million increase on Space Development Agency (SDA) satellite programs and a $130 million increase on the Habitation and Logistics Outpost (HALO) program. Operating Income Fourth quarter 2024 operating income decreased $15 million, or 5 percent, due to a higher operating margin rate, partially offset by lower sales. Operating margin rate increased to 10.1 percent from 9.4 percent principally due to an improvement in net EAC adjustments largely driven by the prior year including a $42 million unfavorable EAC adjustment on the HALO program. 2024 operating income increased $124 million, or 11 percent, primarily due to a higher operating margin rate. Operating margin rate increased to 10.7 percent from 9.5 percent primarily due to higher net EAC adjustments largely driven by the HALO program as previously disclosed. 1 Non-GAAP measure - see definitions at the end of this earnings release. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 9 Guidance      Financial guidance, as well as outlook, trends, expectations and other forward-looking statements provided by the company for 2025 and beyond, reflect the company's judgment based on the information available to the company at the time of this release. The company’s financial guidance and outlook for 2025 and beyond reflect what the company currently anticipates will be the impacts on the company from, among other factors, the global macroeconomic, security, and political/budget environments, including the impacts from inflationary pressures and labor and supply chain challenges; changes in the threat environment; changes in government budget, appropriations and procurement priorities and processes; changes in the regulatory environment; and changes in support for our programs. We are not assuming, and the company’s financial guidance and outlook for 2025 and beyond do not reflect impacts on the company from, any potential continuing resolution, government shutdown, or application of spending limits or other spending cuts. However, the company cannot predict how these factors will evolve or what impacts they will have, and there can be no assurance that the company’s current expectations or underlying assumptions are correct. These factors can affect the company’s ability to achieve guidance or meet expectations. For additional factors that may impact the company’s ability to achieve guidance or meet expectations, please see the “Forward-Looking Statements” section in this release and our Form 10-K. 2025 Guidance ($ in millions, except per share amounts) As of 1/30/2025 Sales $42,000 — $42,500 Segment operating income 1 $4,650 — $4,800 MTM-adjusted EPS 1 $27.85 — $28.25 Free cash flow 1 $2,850 — $3,250 2025 Segment Guidance As of 1/30/2025 Sales ($B) OM Rate % Aeronautics Systems Low $13 Mid to High 9% Defense Systems Low $8 Mid to High 9% Mission Systems ~$12 Mid 14% Space Systems ~$11 High 10% Intersegment Eliminations ~($2.1) High 13% 1 Non-GAAP measure - see definitions at the end of this earnings release. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 10 About Northrop Grumman Northrop Grumman will webcast its earnings conference call at 9:00 a.m. Eastern Time on January 30, 2025. A live audio broadcast of the conference call will be available on the investor relations page of the company’s website at www.northropgrumman.com . Northrop Grumman is a leading global aerospace and defense technology company. Our pioneering solutions equip our customers with the capabilities they need to connect and protect the world, and push the boundaries of human exploration across the universe. Driven by a shared purpose to solve our customers’ toughest problems, our employees define possible every day. ### Forward-Looking Statements and Projections This earnings release 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,” “goals,” “confident,” “on track” and similar expressions generally identify these forward-looking statements. Forward-looking statements include, among other things, statements relating to our future financial condition, results of operations and/or cash flows, including financial guidance, outlook, trends, expectations and other forward-looking statements for 2025 and beyond. Forward-looking statements are based upon assumptions, expectations, plans and projections that we believe to be reasonable when made, but which may change over time. These statements are not guarantees of future performance and inherently involve a wide range of risks and uncertainties that are difficult to predict. Specific risks that could cause actual results to differ materially from those expressed or implied in these forward-looking statements include, but are not limited to, those identified and discussed more fully in the section entitled “Risk Factors” in the Form 10-K for the year ended December 31, 2024, and from time to time in our other filings with the SEC. They include: Industry and Economic Risks • our dependence on the U.S. government for a substantial portion of our business • significant delays or reductions in appropriations and/or for our programs, and U.S. government funding and program support more broadly, including as a result of a prolonged continuing resolution and/or government shutdown, and/or related to the global security environment or other global events • significant delays or reductions in payments as a result of or related to a breach of the debt ceiling • the use of estimates when accounting for our contracts and the effect of contract cost growth and our efforts to recover or offset such costs and/or changes in estimated contract costs and revenues, including as a result of inflationary pressures, labor shortages, supply chain challenges and/or other macroeconomic factors, and risks related to management’s Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 11 judgments and assumptions in estimating and/or projecting contract revenue and performance which may be inaccurate • increased competition within our markets and bid protests • continued pressures from macroeconomic trends, including on costs, schedules, performance and ability to meet expectations Legal and Regulatory Risks • investigations, claims, disputes, enforcement actions, litigation (including criminal, civil and administrative) and/or other legal proceedings • changes in procurement and other laws, SEC, DoD and other rules and regulations, contract terms and practices applicable to our industry, findings by the U.S. government as to our compliance with such requirements, more aggressive enforcement of such requirements and changes in our customers’ business practices globally • the improper conduct of employees, agents, subcontractors, suppliers, business partners or joint ventures in which we participate, including the impact on our reputation and our ability to do business • environmental matters, including climate change, unforeseen environmental costs and government and third-party claims • unanticipated changes in our tax provisions or exposure to additional tax liabilities Business and Operational Risks • cyber and other security threats or disruptions faced by us, our customers or our suppliers and other partners, and changes in related regulations • the performance and viability of our subcontractors and suppliers and the availability and pricing of raw materials, chemicals, parts and components, particularly with inflationary pressures, increased costs, shortages in labor and financial resources, supply chain disruptions, and extended material lead times • our ability to attract and retain a qualified and talented workforce with the necessary security clearances to meet our performance obligations • our exposure to additional risks as a result of our international business, including risks related to global security, geopolitical and economic factors, misconduct, suppliers, laws and regulations • natural disasters, epidemics, pandemics and similar outbreaks and other significant disruptions • our ability to innovate, develop new products and technologies, progress and benefit from digital transformation and maintain technologies to meet the needs of our customers • products and services we provide related to hazardous and high risk operations, including the production and use of such products, which subject us to various environmental, regulatory, financial, reputational and other risks • our ability appropriately to protect and exploit intellectual property rights Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 12 General and Other Risk Factors • the adequacy and availability of, and ability to obtain, insurance coverage, customer indemnifications or other liability protections • the future investment performance of plan assets, gains or losses associated with changes in valuation of marketable securities related to our non-qualified benefit plans, changes in actuarial assumptions associated with our pension and other postretirement benefit plans and legislative or other regulatory actions impacting our pension and postretirement benefit obligations • changes in business conditions that could impact business investments and/or recorded goodwill or the value of other long-lived assets, and other potential future liabilities You are urged to consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of forward-looking statements. These forward-looking statements speak only as of the date this earnings release is first issued or, in the case of any document incorporated by reference, the date of that document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. This release and the attachments also contain non-GAAP financial measures. A reconciliation to the nearest GAAP measure and a discussion of the company’s use of these measures are included in this release or the attachments. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 13 SCHEDULE 1 NORTHROP GRUMMAN CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (Unaudited)   Year Ended December 31 $ in millions, except per share amounts 2024 2023 2022 Sales Product $ 32,726   $ 30,897  $ 28,522  Service 8,307   8,393  8,080  Total sales 41,033   39,290  36,602  Operating costs and expenses Product 26,188   26,226  22,761  Service 6,483   6,513  6,367  General and administrative expenses 3,992   4,014  3,873  Total operating costs and expenses 36,663   36,753  33,001  Operating income 4,370   2,537  3,601  Other (expense) income Interest expense (621) (545) (506) Non-operating FAS pension benefit 656   530  1,505  Mark-to-market pension and OPB benefit (expense) 443   (422) 1,232  Other, net 168   246  4  Earnings before income taxes 5,016   2,346  5,836  Federal and foreign income tax expense 842   290  940  Net earnings $ 4,174   $ 2,056  $ 4,896  Basic earnings per share $ 28.39   $ 13.57  $ 31.61  Weighted-average common shares outstanding, in millions 147.0   151.5  154.9  Diluted earnings per share $ 28.34   $ 13.53  $ 31.47  Weighted-average diluted shares outstanding, in millions 147.3   152.0  155.6  Net earnings (from above) $ 4,174   $ 2,056  $ 4,896  Other comprehensive (loss) income, net of tax Change in cumulative translation adjustment (2) 23  (16) Change in other, net (22) 2  6  Other comprehensive (loss) income, net of tax (24) 25  (10) Comprehensive income $ 4,150   $ 2,081  $ 4,886  Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 14 SCHEDULE 2 NORTHROP GRUMMAN CORPORATION CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) $ in millions, except par value December 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 4,353   $ 3,109  Accounts receivable, net 1,272   1,454  Unbilled receivables, net 5,908   5,693  Inventoried costs, net 1,455   1,109  Prepaid expenses and other current assets 1,286   2,341  Total current assets 14,274   13,706  Property, plant and equipment, net of accumulated depreciation of $8,733 for 2024 and $7,964 for 2023 10,536   9,653  Operating lease right-of-use assets 1,770   1,818  Goodwill 17,512   17,517  Intangible assets, net 254   305  Deferred tax assets 1,599   1,020  Pension and other postretirement benefit plan assets 2,184   1,331  Other non-current assets 1,230   1,194  Total assets $ 49,359   $ 46,544  Liabilities Trade accounts payable $ 2,599   $ 2,110  Accrued employee compensation 2,271   2,251  Advance payments and billings in excess of costs incurred 4,070   4,193  Other current liabilities 5,188   3,388  Total current liabilities 14,128   11,942  Long-term debt, net of current portion of $1,582 for 2024 and $70 for 2023 14,692   13,786  Pension and other postretirement benefit plan liabilities 1,120   1,290  Operating lease liabilities 1,798   1,892  Other non-current liabilities 2,331   2,839  Total liabilities 34,069   31,749  Shareholders’ equity Preferred stock, $1 par value; 10,000,000 shares authorized; no shares issued and outstanding —   —  Common stock, $1 par value; 800,000,000 shares authorized; issued and outstanding: 2024—144,952,026 and 2023—150,109,271 145   150  Paid-in capital —   —  Retained earnings 15,297   14,773  Accumulated other comprehensive loss (152) (128) Total shareholders’ equity 15,290   14,795  Total liabilities and shareholders’ equity $ 49,359   $ 46,544  Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 15 SCHEDULE 3 NORTHROP GRUMMAN CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)   Year Ended December 31 $ in millions 2024 2023 2022 Operating activities Net earnings $ 4,174   $ 2,056  $ 4,896  Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 1,370   1,338  1,342  Mark-to-market pension and OPB (benefit) expense (443) 422  (1,232) Stock-based compensation 101   87  99  Deferred income taxes (582) (988) (321) B-21 charge —   1,559  —  Net periodic pension and OPB income (438) (308) (1,193) Pension and OPB contributions (129) (139) (136) Changes in assets and liabilities: Accounts receivable, net 182   54  (44) Unbilled receivables, net (215) 247  (646) Inventoried costs, net (358) (220) (205) Prepaid expenses and other assets 35   (86) 2  Accounts payable and other liabilities (513) 519  572  Income taxes payable, net 1,143   (658) (279) Other, net 61   (8) 46  Net cash provided by operating activities 4,388   3,875  2,901  Investing activities Capital expenditures (1,767) (1,775) (1,435) Proceeds from sale of equipment to a customer —   —  155  Proceeds from sale of minority investments —   197  —  Other, net 18   (4) 39  Net cash used in investing activities (1,749) (1,582) (1,241) Financing activities Net proceeds from issuance of long-term debt 2,495   1,995  —  Payments of long-term debt —   (1,050) —  Common stock repurchases (2,514) (1,500) (1,504) Cash dividends paid (1,186) (1,116) (1,052) Payments of employee taxes withheld from share-based awards (58) (52) (50) Other, net (132) (38) (7) Net cash used in financing activities (1,395) (1,761) (2,613) Increase (decrease) in cash and cash equivalents 1,244   532  (953) Cash and cash equivalents, beginning of year 3,109   2,577  3,530  Cash and cash equivalents, end of period $ 4,353   $ 3,109  $ 2,577  Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 16 SCHEDULE 4 NORTHROP GRUMMAN CORPORATION TOTAL BACKLOG (Unaudited)   December 31, 2024 December 31, 2023 % Change in 2024 $ in millions Funded 1 Unfunded Total Backlog 2 Total Backlog 2 Aeronautics Systems $ 10,689   $ 13,409   $ 24,098   $ 19,583  23   % Defense Systems 9,873   17,845   27,718   20,198  37   % Mission Systems 11,574   4,869   16,443   16,108  2   % Space Systems 3 7,526   15,683   23,209   28,341  (18) % Total backlog $ 39,662   $ 51,806   $ 91,468   $ 84,230  9   % 1  Funded backlog represents firm orders for which funding is authorized and appropriated. 2  Total backlog excludes unexercised contract options and indefinite delivery, indefinite quantity (IDIQ) contracts until the time the option or IDIQ task order is exercised or awarded. 3  During 2024, the company reduced unfunded backlog by $1.6 billion and $0.7 billion related to terminations for convenience in our restricted space business and on the NGI program at Space Systems, respectively. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 17 SCHEDULE 5 NORTHROP GRUMMAN CORPORATION SUPPLEMENTAL PER SHARE INFORMATION (Unaudited) Three Months Ended December 31 Year Ended December 31 $ in millions, except per share amounts 2024 2023 2024 2023 Per share impact of total net FAS/CAS pension adjustment FAS/CAS operating adjustment $ 8   $ (20) $ 40   $ (82) Non-operating FAS pension benefit 153   133  656   530  Total net FAS/CAS pension adjustment 161   113  696   448  MTM pension and OPB benefit (expense) 443   (422) 443   (422) Total pension-related benefit (expense) 604   (309) 1,139   26  Tax effect 1 (152) 78  (286) (6) After-tax impact $ 452   $ (231) $ 853   $ 20  Weighted-average diluted shares outstanding, in millions 145.9   151.1  147.3   152.0  Per share impact $ 3.10   $ (1.53) $ 5.79   $ 0.13  Per share impact of intangible asset amortization and PP&E step-up depreciation Intangible asset amortization and PP&E step-up depreciation $ (25) $ (30) $ (97) $ (122) Tax effect 1 6   8  24   30  After-tax impact $ (19) $ (22) $ (73) $ (92) Weighted-average diluted shares outstanding, in millions 145.9   151.1  147.3   152.0  Per share impact $ (0.13) $ (0.15) $ (0.50) $ (0.61) 1 Based on a 21% federal statutory tax rate and a 5.25% blended state tax rate. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 18 SCHEDULE 6 NORTHROP GRUMMAN CORPORATION RECAST SEGMENT SALES AND OPERATING INCOME (Unaudited) SALES SEGMENT OPERATING INCOME 1 2023 2024 2023 2024 Total Three Months Ended Total Total Three Months Ended Total ($ in millions) Year Mar 31 Jun 30 Sep 30 Dec 31 Year Year Mar 31 Jun 30 Sep 30 Dec 31 Year AS REPORTED 2 Aeronautics Systems $ 10,786  $ 2,969  $ 2,963  $ (473) $ 297  $ 295  Defense Systems 5,862  1,412  1,513  710  177  204  Mission Systems 10,895  2,659  2,773  1,609  378  361  Space Systems 13,946  3,655  3,573  1,212  332  324  Intersegment eliminations (2,199) (562) (604) (298) (80) (83) Total $ 39,290   $ 10,133   $ 10,218   $ 2,760   $ 1,104   $ 1,101   REALIGNED, effective July 1, 2024 3 Aeronautics Systems $ 10,786  $ 2,969  $ 2,963  $ 2,878  $ 3,220  $ 12,030  $ (473) $ 297  $ 295  $ 298  $ 292  $ 1,182  Defense Systems 8,289  1,990  2,153  2,084  2,333  8,560  829  187  231  196  252  866  Mission Systems 10,895  2,659  2,773  2,823  3,144  11,399  1,609  378  361  390  469  1,598  Space Systems 11,873  3,149  3,002  2,870  2,710  11,731  1,130  330  304  345  275  1,254  Intersegment eliminations (2,553) (634) (673) (659) (721) (2,687) (335) (88) (90) (83) (95) (356) Total $ 39,290   $ 10,133   $ 10,218   $ 9,996   $ 10,686   $ 41,033   $ 2,760   $ 1,104   $ 1,101   $ 1,146   $ 1,193   $ 4,544   FURTHER REALIGNED, effective January 1, 2025 4 Aeronautics Systems $ 11,164  $ 3,044  $ 3,060  $ 2,961  $ 3,331  $ 12,396  $ (416) $ 306  $ 312  $ 309  $ 309  $ 1,236  Defense Systems 7,185  1,737  1,859  1,800  2,003  7,399  684  156  191  160  209  716  Mission Systems 10,895  2,659  2,773  2,823  3,144  11,399  1,609  378  361  390  469  1,598  Space Systems 11,873  3,149  3,002  2,870  2,710  11,731  1,130  330  304  345  275  1,254  Intersegment eliminations (1,827) (456) (476) (458) (502) (1,892) (247) (66) (67) (58) (69) (260) Total $ 39,290   $ 10,133   $ 10,218   $ 9,996   $ 10,686   $ 41,033   $ 2,760   $ 1,104   $ 1,101   $ 1,146   $ 1,193   $ 4,544   1 Non-GAAP measure - see definitions at the end of this earnings release. 2 “As reported” summary operating results for the periods presented reflect the composition of our reportable segments prior to July 1, 2024 as previously disclosed in the company’s filings with the SEC. 3 “Realigned, effective July 1, 2024” summary operating results for periods prior to July 1, 2024 were recast to reflect the realignment of the Strategic Deterrent Systems (SDS) division from Space Systems to Defense Systems effective July 1, 2024 as described in the company’s Form 8-K filed with the SEC on May 16, 2024. Results for periods subsequent to July 1, 2024 represent “As reported” actuals disclosed in the company’s filings with the SEC. 4 “Further realigned, effective January 1, 2025” summary operating results for the periods presented were recast to reflect the realignment of the Strike and Surveillance Aircraft Solutions (SSAS) business unit from Defense Systems to Aeronautics Systems effective January 1, 2025. Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com Northrop Grumman Reports Fourth Quarter and Full-Year 2024 Financial Results 19 Non-GAAP Financial Measures Disclosure: This earnings release contains non-GAAP (accounting principles generally accepted in the United States of America) financial measures, as defined by SEC Regulation G and indicated by a footnote in the text of the release. Definitions for the non-GAAP measures are provided below and reconciliations are provided in the body of the release, except that reconciliations of forward-looking non-GAAP measures are not provided because the company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the occurrence and financial impact of certain items, including, but not limited to, the impact of any mark-to-market pension adjustment. Other companies may define these measures differently or may utilize different non-GAAP measures. MTM-adjusted net earnings: Net earnings excluding MTM benefit (expense) and related tax impacts. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the company’s underlying financial performance by presenting the company’s operating results before the non-operational impact of pension and OPB actuarial gains and losses. This measure is also consistent with how management views the underlying performance of the business as the impact of MTM accounting is not considered in management’s assessment of the company’s operating performance or in its determination of incentive compensation awards. MTM-adjusted EPS: Diluted earnings per share excluding the per share impact of MTM benefit (expense) and related tax impacts. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the company’s underlying financial performance by presenting the company’s diluted earnings per share results before the non-operational impact of pension and OPB actuarial gains and losses. Segment operating income and segment operating margin rate: Segment operating income and segment operating margin rate (segment operating income divided by sales) reflect the combined operating income of our four segments less the operating income associated with intersegment sales. Segment operating income includes pension expense allocated to our sectors under FAR and CAS and excludes FAS pension service expense and unallocated corporate items. These measures may be useful to investors and other users of our financial statements as supplemental measures in evaluating the financial performance and operational trends of our sectors. These measures should not be considered in isolation or as alternatives to operating results presented in accordance with GAAP. Free cash flow: Net cash provided by or used in operating activities less capital expenditures. We use free cash flow as a key factor in our planning for, and consideration of, acquisitions, the payment of dividends and stock repurchases. This measure may be useful to investors and other users of our financial statements as a supplemental measure of our cash performance, but should not be considered in isolation, as a measure of residual cash flow available for discretionary purposes, or as an alternative to operating cash flows presented in accordance with GAAP. Organic sales: Total sales excluding sales attributable to the company’s Training Services business. This measure may be useful to investors and other users of our financial statements as a supplemental measure in evaluating the company’s underlying sales growth as well as in providing an understanding of our ongoing business and future sales trends by presenting the company’s sales before the impact of divestiture activity. # Northrop Grumman Corporation 2980 Fairview Park Drive • Falls Church, VA 22042-4511 news.northropgrumman.com
the item shown at left
other guidance in this release
Text is the filed exhibit, verbatim.