NORTHROP GRUMMAN CORPORATION Exhibit 99
News Release
Contact: Vic Beck (Media) 703-280-4456 (office) vic.beck@ngc.com
Todd Ernst (Investors) 703-280-4535 (office) todd.ernst@ngc.com
Northrop Grumman Reports Fourth Quarter and Full-Year 2022 Financial Results
- Q4 Sales increase 16 percent to $10.0 billion
- 2022 Sales of $36.6 billion; 2022 Organic Sales1 increase 3 percent
- Q4 Diluted EPS of $13.46 including per share MTM benefit of $5.96; Q4 Transaction- Adjusted EPS1 increase 25 percent to $7.50
- 2022 Diluted EPS of $31.47; 2022 Transaction-Adjusted EPS1 of $25.54
- 2022 Net cash provided by operating activities of $2.9 billion; 2022 Transaction-Adjusted Free Cash Flow1 of $1.6 billion
- 2022 Book to Bill of 1.07
- Guidance reflects improved expectations for 2023 Sales of $38.0 to $38.4 Billion, and strong multi-year Cash Flow Outlook with over 20 percent CAGR through 2025
FALLS CHURCH, Va. - January 26, 2023 - Northrop Grumman Corporation (NYSE: NOC) reported fourth quarter 2022 sales increased 16 percent to $10.0 billion, as compared with $8.6 billion in the fourth quarter of 2021. Sales increased 3 percent to $36.6 billion in 2022, as compared with $35.7 billion in 2021. Fourth quarter 2022 sales reflect strong demand, the timing of material receipts and continued improvement in labor availability trends.
Fourth quarter 2022 net earnings were $2.1 billion, including a $922 million after-taxmark-to- market pension and OPB ("MTM") benefit. Fourth quarter 2022 transaction-adjusted net earnings1 were $1.2 billion, or $7.50 per diluted share. 2022 net earnings were $4.9 billion, or $31.47 per diluted share, and include the noted MTM benefit. 2022 transaction-adjusted net earnings1 were $4.0 billion, or $25.54 per diluted share, and reflect an $85 million, or $0.55 per diluted share, reduction for negative returns on marketable securities related to our non-qualified benefit plans and other non-operating assets.
"The Northrop Grumman team continues to deliver strong financial and operating performance, further positioning our company for near and long-term growth. We're providing
- Non-GAAPmeasure - see definitions at the end of this earnings release.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com
differentiated solutions for our customers' highest priority missions, driving a strong global demand signal for our products and maintaining a healthy backlog," said Kathy Warden, chair, chief executive officer and president. "Given our proven ability to competitively win, hire and perform, we're raising our sales outlook for 2023 and expect to deliver strong multi-year cash flow growth. We are focused on executing our strategy, investing in the capabilities and capacity our customers need, and returning a significant portion of our growing cash flows to our shareholders."
- Non-GAAPmeasure - see definitions at the end of this earnings release.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com
Northrop Grumman Reports Fourth Quarter and Full-Year 2022 Financial Results | 3 |
Transaction-adjusted Net Earnings and EPS
2022 net earnings reflect a MTM benefit of $922 million, net of tax. 2021 net earnings reflect a MTM benefit of $1.8 billion, net of tax, and a gain on the sale of the company's IT services business. Excluding the gain on sale of the business, associated federal and state income tax expenses, transaction costs and the make-whole premium for early debt redemption, as well as the impact of the MTM benefit and related tax impacts, 2022 transaction-adjusted net earnings1 decreased 4 percent and transaction-adjusted EPS1 was comparable with the prior year. Net earnings during 2022 and the fourth quarter of 2021 were not impacted by the sale of the company's IT services business and do not include any transaction-related adjustments. Transaction-adjusted net earnings1 and transaction-adjusted EPS1 are measures the company uses to compare performance to prior periods and for EPS guidance.
Lower total pension benefits, including MTM and non-MTM impacts, reduced fourth quarter 2022 diluted EPS by $5.48 and 2022 diluted EPS by $6.19 as compared with the prior year periods. See Schedule 6 at the end of this release for further information.
The table below reconciles net earnings and diluted EPS to transaction-adjusted net earnings1 and transaction-adjusted EPS1:
Three Months Ended | Year Ended | ||||||||
December 31 | December 31 | ||||||||
$ in millions, except per share amounts | 2022 | 2021 | 2022 | 2021 | |||||
Net earnings | $ | 2,080 | $ | 2,710 | $ | 4,896 | $ | 7,005 | |
MTM (benefit) | (1,232) | (2,355) | (1,232) | (2,355) | |||||
MTM-related deferred state tax expense2 | 65 | 124 | 65 | 124 | |||||
Federal tax expense of items above3 | 245 | 469 | 245 | 469 | |||||
MTM adjustment, net of tax | (922) | (1,762) | (922) | (1,762) | |||||
MTM-adjusted net earnings1 | 1,158 | 948 | 3,974 | 5,243 | |||||
Gain on sale of business | - | - | - | (1,980) | |||||
State tax impact4 | - | - | - | 160 | |||||
Transaction costs | - | - | - | 32 | |||||
Make-whole premium | - | - | - | 54 | |||||
Federal tax impact of items above5 | - | - | - | 614 | |||||
Transaction adjustment, net of tax | $ | - | $ | - | $ | - | $ | (1,120) | |
Transaction-adjusted net earnings1 | $ | 1,158 | $ | 948 | $ | 3,974 | $ | 4,123 |
- Non-GAAPmeasure - see definitions at the end of this earnings release.
- The deferred state tax impact in each period was calculated using the company's blended state tax rate of 5.25 percent.
- The federal tax impact in each period was calculated by subtracting the deferred state tax impact from MTM benefit and applying the 21 percent federal statutory rate.
- The state tax impact includes $62 million of incremental tax expense related to $1.2 billion of nondeductible goodwill in the divested business.
- The federal tax impact was calculated by applying the 21 percent federal statutory rate to the adjustment items and also includes $250 million of incremental tax expense related to $1.2 billion of nondeductible goodwill in the divested business.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com
Northrop Grumman Reports Fourth Quarter and Full-Year 2022 Financial Results | 4 | |||||||||
Three Months Ended | Year Ended | |||||||||
December 31 | December 31 | |||||||||
Per share amounts | 2022 | 2021 | 2022 | 2021 | ||||||
Diluted EPS | $ | 13.46 | $ | 17.14 | $ | 31.47 | $ | 43.54 | ||
MTM (benefit) per share | (7.97) | (14.90) | (7.92) | (14.64) | ||||||
MTM-related deferred state tax expense per share2 | 0.42 | 0.78 | 0.42 | 0.77 | ||||||
Federal tax expense of items above per share3 | 1.59 | 2.98 | 1.57 | 2.92 | ||||||
MTM adjustment per share, net of tax | (5.96) | (11.14) | (5.93) | (10.95) | ||||||
MTM-adjusted EPS1 | 7.50 | 6.00 | 25.54 | 32.59 | ||||||
Gain on sale of business per share | - | - | - | (12.31) | ||||||
State tax impact per share4 | - | - | - | 0.99 | ||||||
Transaction costs per share | - | - | - | 0.20 | ||||||
Make-whole premium per share | - | - | - | 0.34 | ||||||
Federal tax impact of line items above per share5 | - | - | - | 3.82 | ||||||
Transaction adjustment per share, net of tax | $ | - | $ | - | $ | - | $ | (6.96) | ||
Transaction-adjusted EPS1 | $ | 7.50 | $ | 6.00 | $ | 25.54 | $ | 25.63 |
- Non-GAAPmeasure - see definitions at the end of this earnings release.
- The deferred state tax impact in each period was calculated using the company's blended state tax rate of 5.25 percent.
- The federal tax impact in each period was calculated by subtracting the deferred state tax impact from MTM benefit and applying the 21 percent federal statutory rate.
- The state tax impact includes $62 million of incremental tax expense related to $1.2 billion of nondeductible goodwill in the divested business.
- The federal tax impact was calculated by applying the 21 percent federal statutory rate to the adjustment items and also includes $250 million of incremental tax expense related to $1.2 billion of nondeductible goodwill in the divested business.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com
Northrop Grumman Reports Fourth Quarter and Full-Year 2022 Financial Results | 5 | ||||||
Consolidated Operating Results and Cash Flows | |||||||
Three Months Ended | Year Ended | ||||||
$ in millions, except per share amounts | December 31 | Change | December 31 | Change | |||
2022 | 2021 | 2022 | 2021 | ||||
Sales | |||||||
Aeronautics Systems | $ 2,757 | $ | 2,631 | 5% | $10,531 | $11,259 | (6%) |
Defense Systems | 1,657 | 1,378 | 20% | 5,579 | 5,776 | (3%) | |
Mission Systems | 2,927 | 2,521 | 16% | 10,396 | 10,134 | 3% | |
Space Systems | 3,278 | 2,658 | 23% | 12,275 | 10,608 | 16% | |
Intersegment eliminations | (586) | (549) | (2,179) | (2,110) | |||
Total sales | 10,033 | 8,639 | 16% | 36,602 | 35,667 | 3% | |
Operating income | |||||||
Aeronautics Systems | 289 | 220 | 31% | 1,116 | 1,093 | 2% | |
Defense Systems | 183 | 167 | 10% | 664 | 696 | (5%) | |
Mission Systems | 452 | 402 | 12% | 1,618 | 1,579 | 2% | |
Space Systems | 297 | 256 | 16% | 1,158 | 1,121 | 3% | |
Intersegment eliminations | (85) | (75) | (303) | (272) | |||
Segment operating income1 | 1,136 | 970 | 17% | 4,253 | 4,217 | 1% | |
Segment operating margin rate1 | 11.3% | 11.2% | 10 bps | 11.6% | 11.8% | (20) bps | |
FAS/CAS operating adjustment | (48) | 32 | (250%) | (200) | 130 | (254%) | |
Unallocated corporate (expense) income: | |||||||
Gain on sale of business | - | - | -% | - | 1,980 | NM | |
IT services divestiture - unallowable | - | - | -% | - | (192) | NM | |
state taxes and transaction costs | |||||||
Intangible asset amortization and PP&E | (61) | (63) | (3%) | (242) | (254) | (5%) | |
step-up depreciation | |||||||
MTM-related deferred state tax expense | (65) | (124) | (48%) | (65) | (124) | (48%) | |
Other unallocated corporate expense | (56) | (73) | (23%) | (145) | (106) | 37% | |
Unallocated corporate (expense) income | (182) | (260) | (30%) | (452) | 1,304 | NM | |
Total operating income | $ 906 | $ | 742 | 22% | $ 3,601 | $ 5,651 | (36%) |
Operating margin rate | 9.0% | 8.6% | 40 bps | 9.8% | 15.8% | (600) bps | |
Interest expense | (120) | (133) | (10%) | (506) | (556) | (9%) | |
Non-operating FAS pension benefit | 376 | 368 | 2% | 1,505 | 1,469 | 2% | |
Mark-to-market pension and OPB benefit | 1,232 | 2,355 | (48%) | 1,232 | 2,355 | (48%) | |
Other, net | 58 | 13 | 346% | 4 | 19 | (79%) | |
Earnings before income taxes | 2,452 | 3,345 | (27%) | 5,836 | 8,938 | (35%) | |
Federal and foreign income tax expense | 372 | 635 | (41%) | 940 | 1,933 | (51%) | |
Effective income tax rate | 15.2% | 19.0% | (380) bps | 16.1% | 21.6% | (550) bps |
Net earnings
Diluted earnings per share
Weighted-average diluted shares outstanding, in millions
$ 2,080 | $ 2,710 | (23%) | $ 4,896 | $ 7,005 | (30%) |
13.46 | 17.14 | (21%) | 31.47 | 43.54 | (28%) |
154.5 | 158.1 | (2%) | 155.6 | 160.9 | (3%) |
- Non-GAAPmeasure - see definitions at the end of this earnings release.
Northrop Grumman Corporation
2980 Fairview Park Drive • Falls Church, VA 22042-4511
news.northropgrumman.com
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Northrop Grumman Corporation published this content on 26 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 January 2023 11:42:04 UTC.
