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Northrop Grumman Corporation (NOC - Free Report) reported second-quarter 2022 earnings of $6.06 per share, which surpassed the Zacks Consensus Estimate of $6.03 by 0.5%. The bottom line however declined 6% from $6.42 reported in the year-ago quarter.
Total Sales
For the second quarter of 2022, Northrop Grumman reported total sales of $8.80 billion, which missed the Zacks Consensus Estimate of $9.12 billion by 3.5%. Sales also decreased 4% from the year-ago quarter’s $9.15 billion.
The downside can be attributed to continued headwinds from the macroeconomic environment, including a tight labor market and extended material lead times, which are affecting the timing of sales.
Organic sales dropped 3% year over year, primarily due to lower sales at Aeronautics Systems and Defense Systems segments.
Northrop Grumman Corporation Price, Consensus and EPS Surprise
Northrop Grumman’s total backlog stood at $79.98 billion at the end of second-quarter 2022 compared with $75.79 billion at first-quarter 2022 end.
Segmental Details
Aeronautics Systems: Segment sales of $2,534 million declined 13% year over year due to lower volume in both Manned Aircraft and Autonomous Systems.
Operating income went down 14% to $258 million, whereas operating margin contracted 10 basis points (bps) to 10.2%.
Mission Systems: Segment sales decreased 3% to $2,516 million due to lower volume on Navigation, Targeting and Survivability programs, the Joint Counter Radio-Controlled Improvised Explosive Device Electronic Warfare (JCREW) program, and airborne radar programs.
Operating income rose 1% to $413 million, with operating margin expanding 60 bps to 16.4%.
Defense Systems: Sales at this segment declined 9% to $1,294 million, primarily due to the completion of a Joint Services support program, lower scope of an international training program, and winding down of the UKAWACS and JSTARS programs.
Operating income declined 5% to $168 million while operating margin expanded 60 bps to 13%.
Space Systems: Space Systems’ second-quarter 2022 sales rose 8% to $2,979 million, driven by higher sales in the Launch & Strategic Missiles business area due to a ramp-up in development programs.
The segment’s operating income improved 3% to $310 million. The operating margin, however, contracted 60 bps to 10.4%.
Operational Update
Operating income during the quarter declined 9% to $954 million, primarily due to a reduction in the FAS/CAS operating adjustment and lower sales.
Financial Condition
Northrop Grumman’s cash and cash equivalents at the end of second-quarter 2022 was $1,169 million, down from $3,530 million as of Dec 31, 2021.
Long-term debt (net of the current portion) at the end of second-quarter 2022 was $12,834 million, up from $12,777 million as of Dec 31, 2021.
Net cash outflow from operating activities at the end of the second quarter was $685 million against a net cash inflow of $962 million as of Jun 30, 2021.
2022 Guidance
Northrop Grumman reaffirmed its financial guidance for 2022.
The company still expects to generate revenues in the range of approximately $36.2-36.6 billion for 2022. The Zacks Consensus Estimate of $36.59 billion lies near the higher end of the company’s guided range.
Adjusted earnings are still projected in the range of $24.50-$25.10 per share. The Zacks Consensus Estimate of $24.80 per share is in line with the mid-point of the guided range.
The company continues to expects adjusted free cash flow in the range of $2.50-$2.80 billion in 2022.
Lockheed Martin Corporation (LMT - Free Report) reported second-quarter 2022 earnings of $6.32 per share, which surpassed the Zacks Consensus Estimate of $6.29 by 0.5%. The bottom line, however, declined 1.6% year over year.
The company’s net sales amounted to $15.45 billion, which missed the Zacks Consensus Estimate of $16.16 billion by 4.4%. The top line also declined 9.3% from $17.03 billion reported in the year-ago quarter.
Hexcel Corporation (HXL - Free Report) reported second-quarter 2022 adjusted earnings of 33 cents per share, which exceeded the Zacks Consensus Estimate of 30 cents by 10%.
The company’s net sales totaled $393 million, which beat the Zacks Consensus Estimate of $383 million by 2.6%. Moreover, the top line witnessed an improvement of 22.7% from the year-ago quarter’s $320.3 million.
AAR Corp. (AIR - Free Report) reported fourth-quarter fiscal 2022 adjusted earnings of 72 cents per share, which surpassed the Zacks Consensus Estimate of 68 cents by 5.9%. Earnings recorded a solid surge of 53.2% from the year-ago quarter.
In the quarter under review, AAR generated net sales worth $476.1 million. The reported figure surpassed the Zacks Consensus Estimate of $468 million by 1.7% and also improved 8.8% from $437.6 million recorded in the year-ago quarter.
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Northrop Grumman's (NOC) Q2 Earnings Top, Sales Decline Y/Y
Northrop Grumman Corporation (NOC - Free Report) reported second-quarter 2022 earnings of $6.06 per share, which surpassed the Zacks Consensus Estimate of $6.03 by 0.5%. The bottom line however declined 6% from $6.42 reported in the year-ago quarter.
Total Sales
For the second quarter of 2022, Northrop Grumman reported total sales of $8.80 billion, which missed the Zacks Consensus Estimate of $9.12 billion by 3.5%. Sales also decreased 4% from the year-ago quarter’s $9.15 billion.
The downside can be attributed to continued headwinds from the macroeconomic environment, including a tight labor market and extended material lead times, which are affecting the timing of sales.
Organic sales dropped 3% year over year, primarily due to lower sales at Aeronautics Systems and Defense Systems segments.
Northrop Grumman Corporation Price, Consensus and EPS Surprise
Northrop Grumman Corporation price-consensus-eps-surprise-chart | Northrop Grumman Corporation Quote
Backlog Count
Northrop Grumman’s total backlog stood at $79.98 billion at the end of second-quarter 2022 compared with $75.79 billion at first-quarter 2022 end.
Segmental Details
Aeronautics Systems: Segment sales of $2,534 million declined 13% year over year due to lower volume in both Manned Aircraft and Autonomous Systems.
Operating income went down 14% to $258 million, whereas operating margin contracted 10 basis points (bps) to 10.2%.
Mission Systems: Segment sales decreased 3% to $2,516 million due to lower volume on Navigation, Targeting and Survivability programs, the Joint Counter Radio-Controlled Improvised Explosive Device Electronic Warfare (JCREW) program, and airborne radar programs.
Operating income rose 1% to $413 million, with operating margin expanding 60 bps to 16.4%.
Defense Systems: Sales at this segment declined 9% to $1,294 million, primarily due to the completion of a Joint Services support program, lower scope of an international training program, and winding down of the UKAWACS and JSTARS programs.
Operating income declined 5% to $168 million while operating margin expanded 60 bps to 13%.
Space Systems: Space Systems’ second-quarter 2022 sales rose 8% to $2,979 million, driven by higher sales in the Launch & Strategic Missiles business area due to a ramp-up in development programs.
The segment’s operating income improved 3% to $310 million. The operating margin, however, contracted 60 bps to 10.4%.
Operational Update
Operating income during the quarter declined 9% to $954 million, primarily due to a reduction in the FAS/CAS operating adjustment and lower sales.
Financial Condition
Northrop Grumman’s cash and cash equivalents at the end of second-quarter 2022 was $1,169 million, down from $3,530 million as of Dec 31, 2021.
Long-term debt (net of the current portion) at the end of second-quarter 2022 was $12,834 million, up from $12,777 million as of Dec 31, 2021.
Net cash outflow from operating activities at the end of the second quarter was $685 million against a net cash inflow of $962 million as of Jun 30, 2021.
2022 Guidance
Northrop Grumman reaffirmed its financial guidance for 2022.
The company still expects to generate revenues in the range of approximately $36.2-36.6 billion for 2022. The Zacks Consensus Estimate of $36.59 billion lies near the higher end of the company’s guided range.
Adjusted earnings are still projected in the range of $24.50-$25.10 per share. The Zacks Consensus Estimate of $24.80 per share is in line with the mid-point of the guided range.
The company continues to expects adjusted free cash flow in the range of $2.50-$2.80 billion in 2022.
Zacks Rank
Northrop Grumman currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Defense Releases
Lockheed Martin Corporation (LMT - Free Report) reported second-quarter 2022 earnings of $6.32 per share, which surpassed the Zacks Consensus Estimate of $6.29 by 0.5%. The bottom line, however, declined 1.6% year over year.
The company’s net sales amounted to $15.45 billion, which missed the Zacks Consensus Estimate of $16.16 billion by 4.4%. The top line also declined 9.3% from $17.03 billion reported in the year-ago quarter.
Hexcel Corporation (HXL - Free Report) reported second-quarter 2022 adjusted earnings of 33 cents per share, which exceeded the Zacks Consensus Estimate of 30 cents by 10%.
The company’s net sales totaled $393 million, which beat the Zacks Consensus Estimate of $383 million by 2.6%. Moreover, the top line witnessed an improvement of 22.7% from the year-ago quarter’s $320.3 million.
AAR Corp. (AIR - Free Report) reported fourth-quarter fiscal 2022 adjusted earnings of 72 cents per share, which surpassed the Zacks Consensus Estimate of 68 cents by 5.9%. Earnings recorded a solid surge of 53.2% from the year-ago quarter.
In the quarter under review, AAR generated net sales worth $476.1 million. The reported figure surpassed the Zacks Consensus Estimate of $468 million by 1.7% and also improved 8.8% from $437.6 million recorded in the year-ago quarter.