MW Northrop's stock falls as B-21 bomber's production costs jump, hurting profits

By Steve Gelsi

Defense contractor's stock drops 10% in premarket trading as profit and revenue fall short of analyst estimates

Northrop Grumman Corp.'s stock fell 10% in premarket trading on Tuesday after the defense contractor said production costs for the B-21 bomber program impacted its first-quarter profit, which fell short of analyst estimates.

One analyst summed up the three months as a "tough quarter" for the company that will likely pressure its stock.

Northrop $(NOC)$ said its income for the three months ending March 31 fell to $481 million, or $3.32 a share, from $944 million, or $6.32 a share, in the year-ago quarter.

Northrop said its results included $2.74 a share in losses on its B-21 program related to higher manufacturing costs in order to speed up production of the aircraft. It also faced higher projected costs and increased quantities of materials.

Breaking out this cost, Northrop would have earned $6.06 a share, below the FactSet consensus estimate of $6.24 a share.

Northrop's first-quarter sales fell 7% to $9.5 billion, missing the analyst expectation of $9.92 billion.

The company cited a winding down of work on space programs for the drop in revenue, along with reduced sales at its aeronautics-systems unit.

These drops were partly offset by a sales boost at its mission-systems and defense-systems businesses.

Northrop Chief Executive Kathy Warden said global demand for the company's products "remains strong."

The company reported a record first-quarter backlog.

Vertical Research analyst Robert Stallard reiterated a hold rating on Northrop and said the B-21 costs impacted free cash flow by $1.8 billion, which was "considerably worse" than his $500 million estimate.

"Overall a tough quarter for Northrop, and we would expect some pressure on the shares today," Stallard said. "There was always the risk of additional charges on the ... B-21 contract, and this just happens to be the quarter when it occurred."

Including the B-21 costs, Northrop said it now expects 2025 earnings of $27.85 a share to $28.25 a share, from its earlier view of $24.95 a share to $25.35 a share. Analysts were expecting 2025 earnings of $28.11 a share.

The company stuck to its revenue forecast of $42 billion to $42.5 billion.

-Steve Gelsi

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April 22, 2025 09:25 ET (13:25 GMT)

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