Yahoo Finance Northrop Grumman Corp (NOC) Q1 2024 Earnings Call Transcript Highlights: Strong Performance and ...
Q1 Sales: Increased by 9% year-over-year.
Segment Operating Margin: Increased by 10%.
Earnings Per Share (EPS): Grew by 15%.
2024 Company Level Guidance: Reaffirmed.
Capital Expenditures: Expected to be $1.8 billion for the year.
Share Repurchases: Total of $1.2 billion in Q1, with expectations to exceed $2 billion for the full year.
Free Cash Flow: Outflow of approximately $1 billion in Q1.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Kathy, could you provide more detail on the $95 billion supplemental and what is in there for Northrop given your related businesses? A: Kathy J. Warden - Northrop Grumman Corporation - Chair, CEO & President: Yes, the supplemental includes areas aligned with our program portfolio, where we are prime in weapons programs and a supplier of solid rocket motors. It also includes funding for additional capacity expansion, reflecting the need to support programs funded in the supplemental.
Q: With the push out to F/A-XX, what strategic impact does that have on the Aeronautics business? A: Kathy J. Warden - Northrop Grumman Corporation - Chair, CEO & President: The push out doesn't impact our near-term outlook for the Aeronautics business. We're raising sales guidance for this year based on the strength of the current portfolio, but we continue to pursue additive opportunities, including this program.
Q: Can you discuss the outlook for book-to-bill this year and the backlog decrease in each segment in Q1? A: Kathy J. Warden - Northrop Grumman Corporation - Chair, CEO & President: We expect the book-to-bill to be near 1 for the year, driven by our shorter-cycle businesses like Mission Systems and Defense Systems. Space will be the lowest due to the NGI loss and a cancellation in Q1. Our space business still carries a large backlog supporting growth rates projected for them.
Q: How does the Air Force moving the IOC schedule back by 2 years affect your growth path on Sentinel? A: Kathy J. Warden - Northrop Grumman Corporation - Chair, CEO & President: The growth coming from Sentinel is expected to flatten out for a few years and then return to growth as we move into the production phase later in the decade. The timing has moved, but the profile remains similar to what we've discussed previously.
Q: The Air Force lowered its near-term requested funding levels for B-21 in the fiscal year '25 budget proposal. How does this change alter the economics of the program and risks of incremental charges? A: Kathy J. Warden - Northrop Grumman Corporation - Chair, CEO & President: The change doesn't alter the economics of the program. The budget was set based on independent cost estimates, and as we moved towards the contract phase, the government reconciled to our contract value, which was lower than their estimates.
Q: Can you talk about the trajectory of the Defense Systems (DS) segment given the supply chain and incremental opportunities such as IBCS and Missile Systems? A: Kathy J. Warden - Northrop Grumman Corporation - Chair, CEO & President: Our Defense Systems portfolio is transforming, focusing more on weapons and battle management, including IBCS. These areas are expected to contribute to growth and are also higher margin than our sustainment business, which should improve margins as the mix shifts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
