Executive Summary
Northrop Grumman Corporation reported Q1 2025 results reflecting a solid but pressured topline and margin profile within a challenging funding and operating environment for defense contractors. Revenue stood at $9.468 billion, down 6.56% year-over-year and 11.40% quarter-over-quarter, with gross profit of $1.58 billion and a gross margin of approximately 16.7%. Operating income was $573 million and net income $481 million, translating to an operating margin of about 6.05% and a net margin near 5.08% for the quarter. Diluted earnings per share were $3.32–$3.33, with 144.6 million weighted-average shares outstanding. The quarter also featured negative free cash flow and a notable deterioration in working capital dynamics, culminating in a negative operating cash flow of about $1.565 billion and free cash flow of roughly $(1.821) billion. On the balance sheet, total assets were $48.47 billion and total liabilities $33.48 billion, yielding stockholders’ equity of about $14.98 billion. Net debt stood at roughly $14.94 billion, with cash and cash equivalents of $1.685 billion and total debt of $16.626 billion. Liquidity metrics remained modest (current ratio ~0.95, quick ratio ~0.84, cash ratio ~0.12), while profitability and cash generation highlighted the impact of working capital movements and a high-capital expenditure cadence. Management commentary is not included in the provided data; no earnings call transcript was supplied. Investors should consider the defense-budget backdrop, project execution risk, and working-capital efficiency as key drivers of near-term performance and longer-term resilience.
Key Performance Indicators
QoQ: -11.40% | YoY:-6.56%
QoQ: -18.22% | YoY:-25.93%
QoQ: -47.38% | YoY:-46.50%
QoQ: -61.95% | YoY:-49.05%
QoQ: -61.55% | YoY:-47.48%
Key Insights
Revenue: $9.468 billion, down 6.56% YoY and 11.40% QoQ. Gross profit: $1.580 billion, gross margin ~16.69%. Operating income: $0.573 billion, operating margin ~6.05%. Net income: $0.481 billion, net margin ~5.08%. EPS (diluted): $3.32. YoY declines across revenue, gross profit, operating income, net income, and EPS highlighted by the provided YoY/QoQ figures in the data. YoY revenue change: -6.56%; QoQ revenue change: -11.40%. Gross profit YoY: -25.93%; QoQ: -18.22%. Operating income YoY: -46.50...
Financial Highlights
Revenue: $9.468 billion, down 6.56% YoY and 11.40% QoQ. Gross profit: $1.580 billion, gross margin ~16.69%. Operating income: $0.573 billion, operating margin ~6.05%. Net income: $0.481 billion, net margin ~5.08%. EPS (diluted): $3.32. YoY declines across revenue, gross profit, operating income, net income, and EPS highlighted by the provided YoY/QoQ figures in the data. YoY revenue change: -6.56%; QoQ revenue change: -11.40%. Gross profit YoY: -25.93%; QoQ: -18.22%. Operating income YoY: -46.50%; QoQ: -47.38%. Net income YoY: -49.05%; QoQ: -61.95%. EPS YoY: -47.48%; QoQ: -61.55%. Cash flow: Net cash provided by operating activities: $(1.565) billion; free cash flow: $(1.821) billion. Balance sheet: total assets $48.468B; total liabilities $33.484B; stockholders’ equity $14.984B. Debt: total debt $16.626B; net debt $14.941B. Liquidity ratios: current ratio 0.95, quick ratio 0.837, cash ratio 0.121. Leverage: debt-to-capitalization 0.526, debt-to-equity 1.110; interest coverage ~3.67x. Dividend payout ratio 62.8%. Valuation indicators (selected): P/E 38.48x, price-to-book 4.94x, price-to-sales 7.82x, dividend yield ~0.41%. Operating cash flow to sales negative, indicating near-term working-capital pressure and potential near-term capex/defense program-cycle impacts. Four-quarter trailing data shows sequential improvement in some quarters and confirmatory revenue softness into Q1 2025.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
9.47B |
-6.56% |
-11.40% |
| Gross Profit |
1.58B |
-25.93% |
-18.22% |
| Operating Income |
573.00M |
-46.50% |
-47.38% |
| Net Income |
481.00M |
-49.05% |
-61.95% |
| EPS |
3.33 |
-47.48% |
-61.55% |
Key Financial Ratios
operatingProfitMargin
6.05%
operatingCashFlowPerShare
$-10.82
freeCashFlowPerShare
$-12.59
dividendPayoutRatio
62.8%
Management Commentary
Transcript data not provided in the supplied materials. Therefore, no management quotes or highlights by theme (strategy, operations, market conditions) can be reproduced. If a transcript is supplied, a dedicated section with quotes and context will be added.
Forward Guidance
No explicit forward guidance or outlook was included in the provided data for Q1 2025. Given the macro backdrop of defense budgets and program execution timelines, a cautious baseline would assume continued demand for core platforms and mission systems, albeit with sensitivity to federal funding cycles and procurement delays. The company’s negative free cash flow and working-capital intensity in Q1 2025 suggest that near-term liquidity management and program-collection cycles will be critical. Investors should monitor: (1) backlog progression and order intake (not disclosed in the data), (2) government funding cycles and potential policy shifts, (3) capital expenditure cadence and any cost-reduction initiatives, (4) accounts receivable/payables dynamics, and (5) free cash flow recovery signals as the year progresses.