Space systems emerged as the company's fastest-growing and top-performing segment.
Space Systems was the fastest-growing segment at Northrop Grumman in the third quarter of 2023, with 11% growth year-over-year, according to the company’s recently released Q3 results.
Northrop Grumman reported a strong quarter overall , posting $9.8bn in sales, up 9% year-over-year. Each segment posted higher sales year-over-year. Company-wide, third quarter 2023 net earnings increased 2% year-over-year to $937m, due to higher operating income and a $97m gain from selling a minority investment in an Australian business.
Not only was Space the fastest-growing segment, but it also was the top-performing segment, with $3.5bn in revenue, beating out $2.8bn in revenue for Aeronautics Systems.
Northrop Grumman reported increased sales in Launch & Strategic Missiles for the Ground Based Strategic Deterrent (GBSD) program, Next Generation Interceptor (NGI), and higher volume on the Space Launch System (SLS) booster program.
The Space business also saw higher sales which were driven by higher volume on restricted programs and the Next-Generation Overhead Persistent Infrared Polar (NextGen Polar) program, partially offset by lower sales on the HALO program, the Habitation and Logistics Outpost contract for NASA.
However, margin for the Space Systems segment decreased to 8.9%, compared to 9.2% in the same time last year.
Highlighting the company’s business in Space in a call with investors, CEO Kathy Warden said: In our Space business, we remain focused on being at the forefront of technology, and that strategy has enabled us to build a differentiated portfolio that provides end-to-end solutions for our customers, from new space architectures to launch capabilities. We see broad applications for the technologies weve developed with a particular focus on national security missions. This includes helping to turn the Space Development Agencys vision of a new low earth orbit constellation of satellites into reality.
Northrop Grumman increased its guidance for the Space segment again, which CFO Dave Keffer noted is due to new wins and continued strength in the business. The company now expects 2023 sales of approximately $14bn, with year-over-year sales growth of 14%. Previous guidance was high $13m.
Company-wide, Northrop Grumman also increased the top-line of guidance from $38.8bn to $39bn. The company raised guidance by $800m throughout the year.
Warden noted to investors that Northrop execs expect Space sales to moderate next year. The Space business has doubled in the last five years. [It will] still be our fastest-growing segment, but the growth profile across the four businesses will be more similar next year, more tightly clustered, she said.
Northrop Grumman named a new vice president of the Space segment during the quarter, naming Robert Fleming to the position. Fleming is currently vice president and general manager of the Strategic Space Systems division in the Space Systems sector. He replaces Tom Wilson, who Warden said is taking a new role with the company focused on expanding business development capabilities company-wide.