Northrop Grumman Corporation · NYSE:NOC
Northrop Grumman — Q4 2024 Earnings Presentation
22 slides from Northrop Grumman's earnings presentation, Jan 30, 2025
Slide 1: Fourth Quarter 2024 Conference Call
Fourth Quarter 2024 Conference Call Kathy Warden Ken Crews Chair, Chief Executive Officer Corporate Vice President and President and Chief Financial Officer January 30, 2025
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation and the information we are incorporating by reference, and statements to be made on the earnings conference call, Business and Operational Risks contain or may contain statements that constitute “forward-looking statements” within the meaning of the Priva
Slide 3: Highlights
Highlights • Demand remains strong; 2024 book-to-bill of 1.23, three-year average book-to-bill ratio of 1.15 Enterprise • International book to bill of 1.4x Spotlight • B-21 program continues to meet key milestones, awarded Lot 2 of LRIP phase in Q4 • Continue active portfolio management; announced
Slide 4: Sales
Sales 4% Year Ended December 31 ($M) 2023 2024 ▲% Aeronautics Systems $10,786 $12,030 12% Defense Systems 8,289 8,560 3% $39,290 $41,033 Mission Systems 10,895 11,399 5% Space Systems 11,873 11,731 (1)% Intersegment Eliminations (2,553) (2,687) Total $39,290 $41,033 4% 2023 2024 Sales growth driven
Slide 5: Segment Operating Income
Segment Operating Income(1) Year Ended December 31 ($M) 2023 2024 ▲% Aeronautics Systems $(473) $1,182 NM Defense Systems 829 866 4% $4,544 Mission Systems 1,609 1,598 (1)% $2,760 Space Systems 1,130 1,254 11% Intersegment Eliminations (335) (356) Total $2,760 $4,544 65% 2023 2024 2024 Segment opera
Slide 6: 2024 MTM-adjusted EPS Bridge
2024 MTM-adjusted EPS(1) Bridge 2023 $15.61 B-21 Charge (2023) 7.68 Segment Performance(2) 1.92 Net Pension(3) 1.33 Sale of Minority Investment (2023) (0.44) Corporate Unallocated, Interest, and Other (0.02) 2024 $26.08 Earnings per share increase driven by strong segment performance 1. Non-GAAP fin
Slide 7: Pension Estimates as of 1/30/25
Pension Estimates(1) as of 1/30/25 ($M) 2024 Actual 2025E 2026E 2027E Actual / Expected Return on Plan Assets 4.7% 7.5% Discount Rate 5.73% 5.73% Required Funding 94 ~100 Mark-to-Market Pension & OPB Income 443 ($M) 2024 Actual 2025E 2026E 2027E CAS Pension Expense 279 ~470 ~310 ~220 FAS Pension Ser
Slide 8: 2025 Segment Guidance
2025 Segment Guidance(1) As of 1/30/2025 Sales ($B) OM Rate % Aeronautics Systems(2) Low $13 Mid to High 9% Defense Systems(2,3) Low $8 Mid to High 9% Mission Systems ~$12 Mid 14% Space Systems ~$11 High 10% Intersegment Eliminations ~($2.1) High 13% Segment guidance(1) reflects the realignment of S
Slide 9: 2025 Company Level Guidance
2025 Company Level Guidance(1) ($M), except per share amounts As of 1/30/2025 Sales $42,000 — $42,500 Segment operating income(2) $4,650 — $4,800 MTM-adjusted EPS(2) $27.85 — $28.25 Free cash flow(2) $2,850 — $3,250 2025 guidance(1) includes divestiture of Training Services business and expected aft
Slide 10: 2025 Supplemental Guidance
2025 Supplemental Guidance(1) ($M) As of 1/30/2025 Total Net FAS/CAS pension adjustment(2) ~$800 Unallocated corporate expense: Intangible asset amortization and PP&E step-up depreciation ~$(90) Other items ~$(280) Training Services divestiture benefit ~$205 Operating income $4,750 — $4,900 Interest
Slide 11: Free cash flow Outlook as of 1/30/25
Free cash flow(1) Outlook(2) as of 1/30/25 ~14% CAGR $3.3B $3.1B $2.9B $2.6B Outlook Range $2.1B 2023 2024 2025 2026 2027 Free cash flow(1) range ($M) 2,850 – 3,250 3,100 – 3,500 3,300 – 3,700 Continue to expect ~$4 billion in 2028 free cash flow(1) 1. Non-GAAP financial measure. See Appendix. 2. Se
Slide 12: Summary
Summary Preeminent portfolio and record backlog position the company for future growth Delivering advanced, cutting-edge technologies, while also growing our international business and pipeline of exportable products Ongoing margin expansion driven by strong performance, mix and cost efficiencies Ra
Slide 13: Appendix
Appendix Fourth Quarter 2024 Conference Call 13
Slide 14: Realignment Bridge
Realignment Bridge Strike and Surveillance Aircraft Solutions (SSAS) Realignment 2024 Sales ($M) Reported(1) Customer Intersegment Total Realigned(2) Aeronautics Systems $12,030 $477 (111) $366 $12,396 Defense Systems 8,560 (477) (684) (1,161) 7,399 Mission Systems 11,399 — — — 11,399 Space Systems
Slide 15: Segment Realignment: Segment Sales
Segment Realignment Segment Sales ($M) 2023 2024 Three Months Ended REALIGNED, Total Year Total Year Mar 31 Jun 30 Sep 30 Dec 31 effective July 1, 2024(1) Aeronautics Systems $10,786 $2,969 $2,963 $2,878 $3,220 $12,030 Defense Systems 8,289 1,990 2,153 2,084 2,333 8,560 Mission Systems 10,895 2,659
Slide 16: Segment Realignment: Segment Operating Income
Segment Realignment (3) Segment Operating Income ($M) 2023 2024 Three Months Ended REALIGNED, Total Year Total Year Mar 31 Jun 30 Sep 30 Dec 31 effective July 1, 2024(1) Aeronautics Systems $(473) $297 $295 $298 $292 $1,182 Defense Systems 829 187 231 196 252 866 Mission Systems 1,609 378 361 390 46
Slide 17: Pension Sensitivities as of 1/30/25
Pension Sensitivities as of 1/30/25 Mark to Market / Net Pension Liability(1) Inc/(Dec) to Expense ($M) +25 bps ~(625) Discount Rate(2) −25 bps ~660 +100 bps ~(290) Plan asset returns (1) −100 bps ~290 FAS Pension Service Expense Inc/(Dec) to Expense ($M) +25 bps ~(10) Discount Rate(2) −25 bps ~10 +
Slide 18: Non-GAAP Definitions
Non-GAAP Definitions Non-GAAP Financial Measures Disclosure: This presentation contains non-GAAP (accounting principles generally accepted in the United States of America) financial measures, as defined by SEC Regulation G and indicated by a footnote in this presentation. Definitions for the non-GAA
Slide 19: Non-GAAP Reconciliations: Segment Operating Income
Non-GAAP Reconciliations Segment Operating Income Three Months Ended December 31 Year Ended December 31 ($M) 2023 2024 2023 2024 Total sales $10,638 $10,686 $39,290 $41,033 Operating (loss) income $(393) $1,089 $2,537 $4,370 Operating margin rate (3.7)% 10.2% 6.5% 10.6% Reconciliation to segment ope
Slide 20: Non-GAAP Reconciliations: MTM-adjusted Net Earnings and EPS
Non-GAAP Reconciliations MTM-adjusted Net Earnings and EPS Three Months Ended December 31 Year Ended December 31 ($M), except per share amounts 2023 2024 2023 2024 Net (Loss) Earnings $(535) $1,264 $2,056 $4,174 MTM expense (benefit) 422 (443) 422 (443) MTM-related deferred state tax (benefit) expen
Slide 21: Non-GAAP Reconciliations: Free Cash Flow
Non-GAAP Reconciliations Free Cash Flow Three Months Ended December 31 Year Ended December 31 ($M) 2023 2024 2023 2024 Net cash provided by operating activities $2,430 $2,578 $3,875 $4,388 Capital expenditures (803) (816) (1,775) (1,767) Free cash flow $1,627 $1,762 $2,100 $2,621 Fourth Quarter 2024
Slide 22: Fourth Quarter 2024 Conference Call
Fourth Quarter 2024 Conference Call 22