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Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2021 earnings of $6.63 per share, which surpassed the Zacks Consensus Estimate of $5.93 by 11.8%. The bottom line increased 13% from $5.89 reported in the year-ago quarter.
Total Sales
In third-quarter 2021, Northrop Grumman reported total sales of $8,720 million, which missed the Zacks Consensus Estimate of $8,870 million by 1.7%. Sales decreased 4% from the year-ago quarter’s $9,083 million.
The downside was primarily due to a double-digit decline in Defense Systems’ sales.
Northrop Grumman Corporation Price, Consensus and EPS Surprise
Northrop Grumman’s total backlog stood at $74.83 billion at the end of third-quarter 2021 compared with $81 billion at 2020-end. Of the total backlog, $30.28 billion was funded.
Segmental Details
Aeronautics Systems: Segment sales of $2,725 million declined 6% year over year due to lower volume in both Manned Aircraft and Autonomous Systems.
Operating income declined 10% to $265 million, whereas operating margin contracted 40 basis points (bps) to 9.7%.
Mission Systems: Segment sales decreased 5% to $2,436 million due to a $133 million reduction in sales related to the IT services divestiture.
Operating income rose 1% to $372 million, with operating margin expanding 80 bps to 15.3%.
Defense Systems: Sales at this segment declined 24% to $1,409 million due to a reduction in sales related to the IT services divestiture.
Operating income declined 19% to $175 million while operating margin expanded 70 bps to 12.4%.
Space Systems: Space Systems’ third-quarter 2021 sales rose 22% to $2,681 million owing to higher sales from Space and Launch & Strategic Missiles businesses.
The segment’s operating income soared 219% to $288 million while the operating margin contracted 50 bps to 10.7%.
Operational Update
Total operating costs and expenses at the end of the quarter were $7,677 million, down 5.2% from the year-ago quarter’s $8,098 million.
Operating income during the quarter increased 6% year over year to $1,043 million.
Financial Condition
Northrop Grumman’s cash and cash equivalents as of Sep 30, 2021 was $4,055 million, down from $4,907 million as of Dec 31, 2020.
Long-term debt (net of current portion) as of Sep 30, 2021 was $12,774 million, down from $14,261 million as of Dec 31, 2020.
Net cash inflow from operating activities as of Sep 30, 2021 was $2,125 million compared with $2,703 million as of Sep 30, 2020.
2021 Guidance
Northrop Grumman has updated its 2021 revenue and earnings guidance.
The company currently expects to generate revenues worth $36 billion compared with its earlier guidance range of $35.80-$36.20 billion. The Zacks Consensus Estimate of $36.20 billion lies above the company’s guided range.
The company’s 2021 earnings are currently projected to be in the range of $25.20-$25.60 per share, up from its prior guided range of $24.40-$24.80. The Zacks Consensus Estimate of $24.91 per share is lower than the guided range.
The company continues to expect its adjusted free cash flow to be in the range of $2.20-$2.50 billion in 2021.
Hexcel Corporation (HXL - Free Report) reported third-quarter 2021 adjusted earnings of 13 cents per share, which exceeded the Zacks Consensus Estimate of 8 cents by 62.5%.
Raytheon Technologies Corporation’s (RTX - Free Report) third-quarter 2021 adjusted earnings per share (EPS) of $1.26 outpaced the Zacks Consensus Estimate of $1.07 by 17.8%.
Lockheed Martin Corporation (LMT - Free Report) reported third-quarter 2021 adjusted earnings of $6.66 per share, which surpassed the Zacks Consensus Estimate of $1.96 by a whopping 239.8%.
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Northrop Grumman (NOC) Beats on Q3 Earnings, Ups 2021 EPS View
Northrop Grumman Corporation (NOC - Free Report) reported third-quarter 2021 earnings of $6.63 per share, which surpassed the Zacks Consensus Estimate of $5.93 by 11.8%. The bottom line increased 13% from $5.89 reported in the year-ago quarter.
Total Sales
In third-quarter 2021, Northrop Grumman reported total sales of $8,720 million, which missed the Zacks Consensus Estimate of $8,870 million by 1.7%. Sales decreased 4% from the year-ago quarter’s $9,083 million.
The downside was primarily due to a double-digit decline in Defense Systems’ sales.
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 $74.83 billion at the end of third-quarter 2021 compared with $81 billion at 2020-end. Of the total backlog, $30.28 billion was funded.
Segmental Details
Aeronautics Systems: Segment sales of $2,725 million declined 6% year over year due to lower volume in both Manned Aircraft and Autonomous Systems.
Operating income declined 10% to $265 million, whereas operating margin contracted 40 basis points (bps) to 9.7%.
Mission Systems: Segment sales decreased 5% to $2,436 million due to a $133 million reduction in sales related to the IT services divestiture.
Operating income rose 1% to $372 million, with operating margin expanding 80 bps to 15.3%.
Defense Systems: Sales at this segment declined 24% to $1,409 million due to a reduction in sales related to the IT services divestiture.
Operating income declined 19% to $175 million while operating margin expanded 70 bps to 12.4%.
Space Systems: Space Systems’ third-quarter 2021 sales rose 22% to $2,681 million owing to higher sales from Space and Launch & Strategic Missiles businesses.
The segment’s operating income soared 219% to $288 million while the operating margin contracted 50 bps to 10.7%.
Operational Update
Total operating costs and expenses at the end of the quarter were $7,677 million, down 5.2% from the year-ago quarter’s $8,098 million.
Operating income during the quarter increased 6% year over year to $1,043 million.
Financial Condition
Northrop Grumman’s cash and cash equivalents as of Sep 30, 2021 was $4,055 million, down from $4,907 million as of Dec 31, 2020.
Long-term debt (net of current portion) as of Sep 30, 2021 was $12,774 million, down from $14,261 million as of Dec 31, 2020.
Net cash inflow from operating activities as of Sep 30, 2021 was $2,125 million compared with $2,703 million as of Sep 30, 2020.
2021 Guidance
Northrop Grumman has updated its 2021 revenue and earnings guidance.
The company currently expects to generate revenues worth $36 billion compared with its earlier guidance range of $35.80-$36.20 billion. The Zacks Consensus Estimate of $36.20 billion lies above the company’s guided range.
The company’s 2021 earnings are currently projected to be in the range of $25.20-$25.60 per share, up from its prior guided range of $24.40-$24.80. The Zacks Consensus Estimate of $24.91 per share is lower than the guided range.
The company continues to expect its adjusted free cash flow to be in the range of $2.20-$2.50 billion in 2021.
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
Hexcel Corporation (HXL - Free Report) reported third-quarter 2021 adjusted earnings of 13 cents per share, which exceeded the Zacks Consensus Estimate of 8 cents by 62.5%.
Raytheon Technologies Corporation’s (RTX - Free Report) third-quarter 2021 adjusted earnings per share (EPS) of $1.26 outpaced the Zacks Consensus Estimate of $1.07 by 17.8%.
Lockheed Martin Corporation (LMT - Free Report) reported third-quarter 2021 adjusted earnings of $6.66 per share, which surpassed the Zacks Consensus Estimate of $1.96 by a whopping 239.8%.