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Northrop Grumman Posts 14% Space Systems Growth in 2023

By Rachel Jewett | January 30, 2024
      Northrop Grumman's headquarters. Photo: Northrop Grumman

      Northrop Grumman’s headquarters. Photo: Northrop Grumman

      Northrop Grumman’s Space segment delivered another year of growth in 2023, posting 14% year-over-year growth. Space Systems was the largest and fastest-growing segment in the company in 2023, with $13.9 billion in revenue. 

      This continues a double-digit growth streak for the Space Systems segment. In 2022, the Space segment grew 16% year-over-year. In 2021, Northrop Grumman grew Space Systems sales 21%, and in 2020 the company grew Space sales by 18% over 2019. 

      Growth in the Space segment came from higher volume on restricted programs and ramp-up on development programs. This included increases on the $426 million Ground Based Strategic Deterrent (GBSD) program, $333 million on the NextGen Polar program, $219 million on the Next Generation Interceptor (NGI) program, $119 million on the SDA Tranche 1 Tracking Layer program and $102 million on the SDA Tranche 2 Transport Layer program. 

      However, the segment saw decreases on the Commercial Resupply Services (CRS) missions and a $109 million decrease on the HALO program, which is the Habitation and Logistics Outpost program for NASA. During the fourth quarter of 2023, Northrop recorded a $42 million charge on the HALO program with the cost of the evolving Lunar Gateway architecture and mission requirements combined with macroeconomic challenges. 

      Space operating income in 2023 was $1.2 billion, up 5% over the prior year, according to Northrop’s full year 2023 results released on Jan. 25. 

      The company provided guidance for 2024, projecting Space revenue in the mid to high $14 billion range. 

      CFO David Keffer said on a Thursday call with investors that Space has expanded sales at a greater than 17% CAGR since 2019, and that growth is expected to moderate in 2024 with higher segment margins. 

      “The mid-single-digit growth rate in Space reflects declines in a restricted program due to shifts in government priority, which are more than offset by growth in other parts of the Space portfolio,” Keffer said. “Having built a tremendous backlog in recent years, Space now has an opportunity to deliver strong ROI through more measured growth along with margin expansion and cash generation.”

      Company-wide, Northrop Grumman reported that in 2023, sales increased 7% to $39.3 billion in 2023, as compared with $36.6 billion in 2022. 

      2023 net earnings were $2 billion — a decrease of $2.8 billion, or 58% compared to the prior year. This was principally due to a $1.7 billion after-tax mark-to-market pension and OPB actuarial gains and losses 

      Backlog at the end of 2023 totaled $84.2 billion.