Company: NOC
Filing Date: 2025-04-22
Form Type: 10-Q
Source: 0001133421-25-000023
Chunk: 71

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-04-22
Form: 10-Q
Item: Part I, Item 2
Chunk 71
---
 segment, which was the main driver of the increased cost estimates for the Production and Deployment phases. We are partnering with our customer to establish a new program baseline as part of the restructuring activities.

During the first quarter of 2025, we reviewed our estimated profitability on the Sentinel program and made no significant changes. The Sentinel EAC incorporates our best estimate of costs to complete the restructured EMD effort; however, if the outcome is more or less favorable than what we have estimated, our financial position, results of operations and/or cash flows could be materially affected.

CONSOLIDATED OPERATING RESULTS

Selected financial highlights are presented in the table below:

Three Months Ended March 31%$ in millions, except per share amounts20252024ChangeSales$9,468 $10,133 (7)%Operating costs and expenses8,895 9,062 (2)%Operating costs and expenses as a % of sales93.9 %89.4 %Operating income573 1,071 (46)%Operating margin rate6.1 %10.6 %Federal and foreign income tax expense97 187 (48)%Effective income tax rate16.8 %16.5 %Net earnings481 944 (49)%Diluted earnings per share$3.32 $6.32 (47)%

-23-

Table of ContentsNORTHROP GRUMMAN CORPORATION                        

Sales

First quarter 2025 sales decreased $665 million, or 7 percent, driven by lower sales at Space Systems due, in part, to the wind-down of work on certain Space programs, as discussed in our segment operating results below, and lower sales at Aeronautics Systems. These decreases were partially offset by higher sales at Mission Systems and Defense Systems.

See “Segment Operating Results” below for further information by segment and “Product and Service Analysis” for product and service detail. See Note 10 to the financial statements for information regarding the company’s sales by customer type, contract type and geographic region for each of our segments.

Operating Income and Margin Rate

First quarter 2025 operating income decreased $498 million, or 46 percent, primarily due to a $477 million loss provision on the B-21 program at Aeronautics Systems and lower operating income at Space Systems and Mission Systems, partially offset by higher operating income at Defense Systems and a $57 million increase in the FAS/CAS operating adjustment. Operating margin rate declined to 6