Company: NOC
Filing Date: 2025-04-22
Form Type: 10-Q
Source: 0001133421-25-000023
Chunk: 47

Company: NORTHROP GRUMMAN CORP /DE/
Filing Date: 2025-04-22
Form: 10-Q
Item: Part I, Item 1
Chunk 47
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. In the meantime, we expect to continue to make additional federal tax payments based on the current Section 174 tax law, which we estimate will reduce our 2025 cash from operations by approximately $230 million. The impact of Section 174 on our cash from operations depends on the amount of research and development expenditures incurred by the company and whether the IRS issues guidance on the provision which differs from our current interpretation, among other things.

Cash Flow Measures

In addition to our cash position, we consider various cash flow measures in capital deployment decision-making, including cash provided by operating activities and free cash flow, a non-GAAP measure described in more detail below. 

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Table of ContentsNORTHROP GRUMMAN CORPORATION                        

Operating Cash Flow

The table below summarizes key components of cash used in operating activities: 

Three Months Ended March 31%$ in millions20252024ChangeNet earnings$481 $944 (49)%B-21 loss provision477 — NMNon-cash items(1)242 103 135 %Pension and OPB contributions(28)(36)(22)%Changes in trade working capital(2,734)(1,710)60 %Other, net(3)(7)(57)%Net cash used in operating activities$(1,565)$(706)(122)%

(1)Includes depreciation and amortization, stock based compensation expense, deferred income taxes and net periodic pension and OPB income.

First quarter 2025 net cash from operating activities decreased $859 million as compared with the same period in 2024 primarily due to changes in trade working capital largely driven by a comparative increase in vendor payments as well as the timing of billings and collections. The net use of cash during the first quarter is consistent with the company’s historical timing of operating cash flows, which are generally more heavily weighted towards the second half of the year.

Free Cash Flow

Free cash flow, as reconciled in the table below, is a non-GAAP measure defined as net cash provided by or used in operating activities less capital expenditures, and may not be defined and calculated by other companies in the same manner. We use free cash flow as a key factor in our planning for, and consideration of, acquisitions, the payment of dividends and stock repurchases. This non-GAAP measure may be useful to investors and other users of our financial statements as a supplemental measure of our cash performance, but should not be considered in isolation, as a measure of residual cash flow available