Northrop Grumman lifts 2025 outlook on Q2 results; shares rise in early trading

Northrop Grumman’s (NYSE:NOC) shares rose 3.2% in premarket trading Tuesday after the aerospace and defense contractor raised its full-year guidance and posted a stronger-than-expected second quarter, fueled by operational performance and a one-time gain from a business divestiture.

Second-quarter revenue rose 1% from a year earlier to $10.4 billion in the quarter, beating the average estimate among Wall Street analysts of $10.09 billion.

Net earnings rose 25% to $1.2 billion, or $8.15 per diluted share, compared with $940 million, or $6.36 a share, in the same quarter last year. The latest quarter includes a $1.04 per share benefit from the sale of its training services business. The consensus forecast was $6.86 a share.

“The Northrop Grumman team delivered a strong second quarter, with increased sales and outstanding operating performance,” Kathy Warden, chair, chief executive officer and president, said in a statement. She highlighted growing global demand, noting international sales surged 18% in the quarter.

Operating income climbed 31% to $1.4 billion, lifting the company’s operating margin to 13.8%, up from 10.7% a year ago. Segment operating income grew 11% to $1.2 billion, with margins improving across all four major business units.

Mixed performance across segments

• Mission Systems led the gains, with sales up 14% to $3.2 billion and operating income rising 22%, aided by a large restricted program award and stronger performance in radar and navigation systems.
• Defense Systems posted a 7% increase in sales, boosted by the Sentinel missile program and military ammunition demand. Operating income surged 32% on favorable contract adjustments.
• Aeronautics Systems saw a modest 2% sales increase as work ramped up on the B-21 and E-130J TACAMO programs.
• Space Systems was the lone laggard, with sales down 12% to $2.6 billion due to the wind-down of certain programs, including the Next Generation Interceptor.

Cash flow and guidance

Despite the strong profit performance, free cash flow declined 42% year-over-year to $640 million, primarily because of higher tax payments following a federal tax refund in the prior year.

Northrop raised its full-year outlook for several key metrics:

• Segment operating income: $4.275 billion to $4.375 billion (up from $4.2 billion to $4.35 billion)
• MTM-adjusted EPS: $25.00 to $25.40 (previously $24.95 to $25.35)
• Free cash flow: $3.05 billion to $3.35 billion (previously $2.85 billion to $3.25 billion)

Backlog ended the quarter at $89.7 billion, supported by $7.4 billion in new awards, including contracts for the F-35, GMLRS, Triton and various restricted programs.

Looking ahead, Northrop said it remains confident in its ability to deliver on customer needs amid a shifting geopolitical and budgetary landscape. CEO Warden reaffirmed the company’s focus on “peace through strength” and continued investment in next-generation capabilities.