Northrop Grumman Corporation · NYSE:NOC
Northrop Grumman — Q3 2024 Earnings Presentation
19 slides from Northrop Grumman's earnings presentation, Oct 24, 2024
Slide 1: Third Quarter 2024 Conference Call
Third Quarter 2024 Conference Call Kathy Warden Ken Crews Chair, Chief Executive Officer Corporate Vice President and President and Chief Financial Officer Dave Keffer Corporate Vice President of Finance October 24, 2024
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: Q3 Highlights
Q3 Highlights • New record backlog of $85 billion Enterprise • Selected to produce Glide Phase Interceptor (GPI), the first of its kind defensive countermeasure Spotlight against hypersonic missile threats • Broad international pipeline converting to backlog, international book to bill ratio of >2x
Slide 4: Q3 Sales
Q3 Sales Three Months Ended September 30 2% ($M) 2023 2024 ▲% Aeronautics Systems $2,766 $2,878 4% Defense Systems 2,050 2,084 2% $9,775 $9,996 Mission Systems 2,628 2,823 7% Space Systems 2,953 2,870 (3)% Intersegment Eliminations (622) (659) Total $9,775 $9,996 2% Q3 2023 Q3 2024 Solid third quart
Slide 5: Q3 Segment Operating Income
Q3 Segment Operating Income(1) 5% Three Months Ended September 30 ($M) 2023 2024 ▲% Aeronautics Systems $283 $298 5% Defense Systems 201 196 (2)% $1,089 $1,146 Mission Systems 386 390 1% Space Systems 302 345 14% Intersegment Eliminations (83) (83) Total $1,089 $1,146 5% Q3 2023 Q3 2024 Segment oper
Slide 6: Q3 Diluted EPS Bridge
Q3 Diluted EPS Bridge 13% Q3 2023 Diluted EPS $6.18 Segment Performance 0.51 Net Pension(1) 0.41 $7.00 Federal Tax Rate 0.22 $6.18 Sale of Minority Investment (prior year) (0.44) Marketable Securities, Interest, and Other 0.12 Q3 2024 Diluted EPS $7.00 Q3 2023 Q3 2024 Q3 Diluted EPS increase 13% to
Slide 7: 2024 Segment Guidance
2024 Segment Guidance(1) As of 10/24/2024 Sales ($B) OM Rate % Aeronautics Systems ~$12 ~10% Prior: High $11 Prior: Mid to High 9% Defense Systems High $8 ~10% Prior: ~$9 Mission Systems Mid $11 High 13% Prior: Low to Mid 14% Space Systems Mid to High $11 Mid to High 10% Prior: Low 10% Intersegment
Slide 8: 2024 Company Level Guidance
2024 Company Level Guidance(1) ($M), except per share amounts As of 10/24/2024 Sales $41,000 — $41,400 Segment operating income(2) $4,525 — $4,575 Prior: $4,500 — $4,575 MTM-adjusted EPS(2) $25.65 — $26.05 Prior: $24.90 — $25.30 Free cash flow(2) $2,250 — $2,650 Increasing EPS guidance by 75 cents o
Slide 9: 2025 Net Pension Income Sensitivities ($M)
2025 Net Pension Income Sensitivities ($M) Asset Returns FAS(2)(3) 4.5% 6.0% 7.5% 9.0% 10.5% -50 bps 460 495 530 560 590 Discount -25 bps 430 465 500 530 565 Rate 0 bps 400 435 470 500 535 Change(5) 25 bps 375 410 440 475 505 50 bps 350 380 415 450 480 Current estimates(1) as of 4.5% 6.0% 7.5% 9.0%
Slide 10: 2025 Outlook as of 10/24/2024
2025 Outlook as of 10/24/2024(1) Expect sales growth between 3% and 4% driven by AS, DS, and MS • Space sales expected to be down mid-single digits due to 2024 wind-down of restricted and NGI programs • Continue to expect margin dollars to grow faster than sales driven by strong performance Reaffirm
Slide 11: Appendix
Appendix Third Quarter 2024 Conference Call 11
Slide 12: 2024 Supplemental Guidance
2024 Supplemental Guidance(1) ($M) As of 10/24/2024 Total Net FAS/CAS pension adjustment(2) ~$700 Unallocated corporate expense: Intangible asset amortization and PP&E step-up depreciation ~$100 Other items ~$110 Prior: ~$150 Operating income $4,345 — $4,395 Prior: $4,280 - $4,355 Interest expense ~
Slide 13: Financial Guidance
Financial Guidance Financial guidance, as well as outlook, trends, expectations and other forward-looking statements provided by the company for 2024 and beyond, reflect the company's judgment based on the information available to the company at the time of this presentation. The company’s financial
Slide 14: Segment Realignment: Segment Sales
Segment Realignment Segment Sales 2022 2023 2024 Three Months Ended Three Months Ended Total Year Total Year ($M) AS REPORTED(1) Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Aeronautics Systems $10,531 $2,515 $2,595 $2,766 $2,910 $10,786 $2,969 $2,963 Defense Systems 5,579 1,376 1,420 1,421 1,645 5,862
Slide 15: Segment Realignment: Segment Operating Income
Segment Realignment (3) Segment Operating Income 2022 2023 2024 Three Months Ended Three Months Ended Total Year Total Year ($M) AS REPORTED(1) Mar 31 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 Aeronautics Systems $1,116 $237 $278 $283 $(1,271) $(473) $297 $295 Defense Systems 664 160 166 182 202 710 177 20
Slide 16: Non-GAAP Definitions
Non-GAAP Definitions Non-GAAP Financial Measures Disclosure: This presentation contains non-GAAP (accounting principles generally accepted in the United States of America) financial measures, as defined by SEC Regulation G and indicated by a footnote in this presentation. Definitions for the non-GAA
Slide 17: Non-GAAP Reconciliations: Segment Operating Income
Non-GAAP Reconciliations Segment Operating Income Three Months Ended Nine Months Ended September 30 September 30 ($M) 2023 2024 2023 2024 Total sales $9,775 $9,996 $28,652 $30,347 Operating income $1,016 $1,120 $2,930 $3,281 Operating margin rate 10.4% 11.2% 10.2% 10.8% Reconciliation to segment ope
Slide 18: Non-GAAP Reconciliations: Free Cash Flow
Non-GAAP Reconciliations Free Cash Flow Three Months Ended Nine Months Ended September 30 September 30 ($M) 2023 2024 2023 2024 Net cash provided by operating activities $1,228 $1,091 $1,445 $1,810 Capital expenditures (359) (361) (972) (951) Free cash flow $869 $730 $473 $859 Third Quarter 2024 Con
Slide 19: Third Quarter 2024 Conference Call
Third Quarter 2024 Conference Call 19