Northrop Grumman Corporation reported a strong first quarter for 2024, beating earnings expectations with an EPS of $6.32 compared to the expected $5.83. The company’s performance was driven by growth across all four sectors and a focus on technology leadership aligned with customer priorities. Global demand for their products remains robust with support from the U.S. government and new international opportunities emerging. The company remains confident in its longer-term outlook despite potential slower growth in the U.S. defense budget in the short term.
The company’s capital deployment strategy includes investments in capabilities to address evolving threats, with roughly $1.8 billion expected to be invested in capital expenditures in 2024. Additionally, Northrop Grumman plans to return capital to shareholders with nearly $1.5 billion already returned in the first quarter. The company’s focus on performance and driving cost efficiencies includes deploying systems and tools for increased productivity, such as a significant financial ERP upgrade that was implemented with minimal disruption to operations.
In terms of program execution, Northrop Grumman is focused on delivering key capabilities, such as the progress on the Sentinel Program and U.S. strategic deterrent modernization efforts. The company is also actively pursuing international opportunities for products like sensor modernization of fourth-generation aircraft and autonomous systems. Additionally, there is growing demand for missile products and ammunition, with several significant opportunities in the pipeline that could support further growth in the defense systems portfolio at solid margins.
Financially, Northrop Grumman saw a 9% increase in quarterly sales, driven by growth in all four segments. Operating profit expansion and a lower share count contributed to a 15% growth in EPS. The company reaffirmed its 2024 company level guidance and provided updates at the segment level. This includes expectations for a book-to-bill ratio close to 1, with variations in sales and margin volume expected for different segments throughout the year. Northrop Grumman remains confident in its strong and predictable cash flows to support its diverse and durable portfolio and create value for stakeholders.
