Name: Northrop Grumman Corp. (NYSE:NOC) | Income Statement
Creator: Stock Analysis on Net

Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

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Northrop Grumman Corp., consolidated income statement

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Product	28,522)	27,868)	27,015)	23,852)	20,469)
Service	8,080)	7,799)	9,784)	9,989)	9,626)
Sales	36,602)	35,667)	36,799)	33,841)	30,095)
Product	(22,761)	(22,309)	(21,559)	(18,675)	(15,785)
Service	(6,367)	(6,090)	(7,762)	(7,907)	(7,519)
Cost of sales	(29,128)	(28,399)	(29,321)	(26,582)	(23,304)
Gross profit	7,474)	7,268)	7,478)	7,259)	6,791)
General and administrative expenses	(3,873)	(3,597)	(3,413)	(3,290)	(3,011)
Gain on sale of business	—)	1,980)	—)	—)	—)
Operating income	3,601)	5,651)	4,065)	3,969)	3,780)
Interest expense	(506)	(556)	(593)	(528)	(562)
Non-operating FAS pension benefit	1,505)	1,469)	1,198)	800)	1,049)
Mark-to-market pension and OPB benefit (expense)	1,232)	2,355)	(1,034)	(1,800)	(655)
Other, net	4)	19)	92)	107)	130)
Other income (expense)	2,235)	3,287)	(337)	(1,421)	(38)
Earnings before income taxes	5,836)	8,938)	3,728)	2,548)	3,742)
Federal and foreign income tax expense	(940)	(1,933)	(539)	(300)	(513)
Net earnings	4,896)	7,005)	3,189)	2,248)	3,229)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Revenue growth exhibited a generally positive trajectory from 2018 to 2022, increasing from 30,095 million US$ to 36,602 million US$. This growth was primarily driven by a consistent expansion in product sales, which rose from 20,469 million US$ in 2018 to 28,522 million US$ in 2022. In contrast, service revenue demonstrated volatility and a general downward trend after 2019, declining from a peak of 9,989 million US$ to 8,080 million US$ by the end of the period.

Gross Profitability and Cost Structure: Gross profit remained relatively stagnant despite the increase in total sales, fluctuating between 6,791 million US$ in 2018 and 7,474 million US$ in 2022. The cost of sales increased in tandem with revenue, indicating that gross margins have faced compression over the five-year period. General and administrative expenses showed a steady annual increase, rising from 3,011 million US$ in 2018 to 3,873 million US$ in 2022, which placed additional pressure on operating margins.
Operating Income Trends: Operating income remained stable between 2018 and 2020, hovering around the 3,800 to 4,000 million US$ range. A significant spike occurred in 2021, where operating income reached 5,651 million US$, largely attributable to a one-time gain on the sale of a business amounting to 1,980 million US$. Excluding this extraordinary item, operating income in 2022 declined to 3,601 million US$, the lowest level in the analyzed period.
Non-Operating Items and Pension Impact: The financial results were heavily influenced by non-operating pension adjustments. The non-operating FAS pension benefit provided a consistent and growing positive contribution, increasing from 1,049 million US$ in 2018 to 1,505 million US$ in 2022. However, mark-to-market pension and OPB adjustments introduced substantial volatility, shifting from a loss of 1,800 million US$ in 2019 to a gain of 2,355 million US$ in 2021.
Net Earnings Analysis: Net earnings displayed significant variance, reflecting the impact of non-recurring gains and pension fluctuations. After a dip to 2,248 million US$ in 2019, net earnings peaked at 7,005 million US$ in 2021, driven by the combined effect of the business sale gain and favorable pension mark-to-market adjustments. By 2022, net earnings normalized to 4,896 million US$, remaining higher than 2018 levels but below the 2021 peak.

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