Northrop Grumman increases 2025 guidance after strong Q2 results

Northrop Grumman posted a solid second quarter in 2025, supported by higher sales in key business units and the divestiture of its training services division. Revenue for the quarter ending June 30 reached $10.4 billion, up 1% year-on-year.

Net earnings rose to $1.17 billion from $940 million, while diluted EPS climbed to $8.15, including a $1.04 gain from the divestiture. Operating income jumped 31% to $1.43 billion, with margins improving to 13.8%. Segment operating income rose 11% to $1.22 billion, driven by Mission Systems, Defense Systems and Aeronautics Systems.

During the earnings call, Kathy Warden, chair, CEO and president of Northrop Grumman, highlighted strong international momentum, with sales up 18% in the quarter and 14% year to date.

“The US and our allies are making significant investments into [their capabilities], and we continue to see growing demand and opportunity for our broad range of product offerings, whether in the space, air, land, cyber, or undersea domains,” Warden said.

Mission Systems sees double-digit growth, Space division drops

Mission Systems was the top performer, with sales rising 14% to $3.16 billion thanks to restricted program awards and growing demand for radar systems and advanced technologies. Defense Systems followed with a 7% increase to $1.99 billion, driven by strong progress on the Sentinel intercontinental ballistic missile program and ammunition contracts.

Aeronautics Systems posted a modest 2% growth to $3.11 billion supported by continued progress on the B-21 Raider bomber and development work on the E-130J TACAMO aircraft.

Space Systems, however, fell 12% to $2.65 billion as the company wound down restricted space projects and the Next Generation Interceptor program, which was won by Lockheed Martin.

Despite strong operating results, free cash flow dropped 42% year-on-year to $637 million due to higher tax payments. Northrop Grumman ended the quarter with a backlog of $89.7 billion, underlining sustained demand across its portfolio. Key awards included $1.8 billion in classified programs, $500 million tied to the F-35 program and $200 million for the MQ-4C Triton unmanned system.

Global demand and strategic programs push backlog to $89.7B

International momentum remains a major growth driver, with overseas sales up 18% in the quarter and 14% year-to-date. The U.S. and allied investments in air, land, sea, space and cyber capabilities are translating into opportunities for integrated air and missile defense systems, radars and autonomy solutions. Programs like IBCS and next-generation interceptors are gaining traction globally, while new initiatives such as the Beacon autonomous platform aim to accelerate mission capability.

Domestically, the company is seeing strong funding support for strategic programs. The recent reconciliation bill and FY26 budget request include a combined 22% increase in procurement and R&D over FY25, adding billions for programs such as Sentinel and B-21. The stealth bomber received an additional $4.5 billion to accelerate production capacity, with discussions underway to ramp up output faster. Warden said any agreement would need to ensure “a fair and equitable business arrangement” as Northrop invests further in manufacturing infrastructure.

Northrop Grumman closed the quarter with a $89.7 billion backlog, underscoring long-term demand. Key Q2 awards included $1.8 billion in classified programs, $500 million for the F-35 and $200 million for the MQ-4C Triton high-altitude unmanned system.

Northrop Grumman raises full-year 2025 guidance 

The company raised its full-year outlook, projecting sales of $42.05–$42.25 billion, MTM-adjusted EPS of $25.00–$25.40, free cash flow of up to $3.35 billion and segment operating income as high as $4.38 billion.

With a record backlog, growing international orders and major U.S. programs entering production ramps, Northrop Grumman signaled confidence in sustaining growth while accelerating capability delivery for its customers.The post Northrop Grumman increases 2025 guidance after strong Q2 results appeared first on AeroTime.

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