Benzinga | Jul 29, 2021 09:28AM EDT

Northrop Grumman Stocks Gains On Q2 Earnings Beat, Raised Guidance

* Northrop Grumman Corporation (NYSE:NOC) reported a second-quarter sales increase of 9% year-over-year to $9.2 billion (+10% on an organic basis), beating the consensus of $8.77 billion.

* Sales by segments: Aeronautics Systems $2.91 billion (flat), Defense Systems $1.43 billion (-24% Y/Y), Mission Systems $2.59 billion (+6% Y/Y), and Space Systems $2.75 billion (+34% Y/Y).

* Adjusted EPS increased to $6.42 from $6.01 in 2Q20, beating the consensus of $5.83.

* The segment operating income increased 8% Y/Y to $1.12 billion, and the margin expanded by 60 bps to 12.2%, while the overall operating margin expanded by 20 bps to 11.4%.

* Northrop Grumman generated YTF cash from operating activities of $962million, compared to $1.34 billion a year ago, with an adjusted Free cash flow of $583 million (-27% Y/Y).

* The company's backlog at the end of the quarter was at $76.6 billion. Net awards in the quarter totaled $6.5 billion, and year-to-date was at $15.4 billion.

* FY21 Outlook: Northrop expects sales of $35.8 billion to $36.2 billion (up from prior guided $35.3 billion-$35.7 billion) vs. the consensus of $35.81 billion and Transaction adjusted EPS of $24.40 to $24.80 (up from prior guided $24.00 -$24.50) vs. the consensus of $24.58.

* It expects a Transaction-adjusted free cash flow of $3 billion-- $3.3 billion, a Segment operating margin of 11.6% -- 11.8%, and an Operating margin of 15.5%-15.7%.

* Price action: NOC shares traded higher by 0.52% at $362 in the premarket session on the last check Thursday.