Northrop Grumman's Q4 2024: Contradictions Unveiled on Sentinel Restructuring, Aeronautics Margins, and B-21 Profitability

These are the key contradictions discussed in Northrop Grumman's latest 2024



Backlog Growth and International Demand:
- Northrop Grumman ended 2024 with a backlog of approximately $91.5 billion, up 9% compared to the previous year.
- This growth was driven by significant new competitive wins and follow-on awards, with an international book-to-bill ratio of 1.4x for the year.
- The demand is fueled by international agreements such as the TACAMO program and the second LRIP Lot on B-21.

Strong Financial Performance and Margin Expansion:
- Northrop Grumman generated sales of $10.7 billion in Q4 and $41 billion for the year, with an increase of 4.4% in 2024 sales.
- Segment operating income was over $4.5 billion, with a segment operating margin rate expanding to 11.1%.
- The company achieved margin expansion through proactive actions like digital tool implementation, organizational structuring, and improved operational efficiencies.

Free Cash Flow Growth:
- 2024 free cash flow increased by 25% year-over-year to over $2.6 billion at the high end of guidance.
- This growth was driven by strong cash generation and disciplined capital management strategies, positioning the company for future growth.

International Sales Acceleration:
- Northrop Grumman expects its international business to accelerate and grow faster than U.S. sales in 2025, supported by a strong pipeline and backlog.
- This growth is driven by international awards like the next iteration of Poland's IBCS system and the restructuring of the Sentinel program.