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

Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

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Northrop Grumman Corp., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net earnings	4,896)	7,005)	3,189)	2,248)	3,229)
Depreciation and amortization	1,342)	1,239)	1,267)	1,265)	800)
Mark-to-market pension and OPB (benefit) expense	(1,232)	(2,355)	1,034)	1,800)	655)
Stock-based compensation	99)	94)	90)	127)	86)
Deferred income taxes	(321)	603)	210)	(509)	234)
Gain on sale of business	—)	(1,980)	—)	—)	—)
Net periodic pension and OPB income	(1,193)	(1,091)	(802)	(432)	—)
Pension and OPB contributions	(136)	(141)	(887)	(263)	—)
Accounts receivable, net	(44)	(10)	(285)	122)	202)
Unbilled receivables, net	(646)	(414)	160)	(335)	(297)
Inventoried costs, net	(205)	(52)	18)	(135)	(37)
Prepaid expenses and other assets	2)	66)	(147)	(78)	(56)
Accounts payable and other liabilities	572)	376)	719)	617)	381)
Income taxes payable, net	(279)	215)	(238)	(63)	(258)
Retiree benefits	—)	—)	—)	—)	(1,083)
Changes in assets and liabilities	(600)	181)	227)	128)	(1,148)
Other, net	46)	12)	(23)	(67)	(29)
Adjustments to reconcile to net cash provided by operating activities	(1,995)	(3,438)	1,116)	2,049)	598)
Net cash provided by operating activities	2,901)	3,567)	4,305)	4,297)	3,827)
Divestiture of IT services business	—)	3,400)	—)	—)	—)
Acquisition of Orbital ATK, net of cash acquired	—)	—)	—)	—)	(7,657)
Capital expenditures	(1,435)	(1,415)	(1,420)	(1,264)	(1,249)
Proceeds from sale of equipment to a customer	155)	84)	205)	—)	—)
Other, net	39)	(11)	4)	57)	28)
Net cash (used in) provided by investing activities	(1,241)	2,058)	(1,211)	(1,207)	(8,878)
Net proceeds from issuance of long-term debt	—)	—)	2,239)	—)	—)
Payments of long-term debt	—)	(2,236)	(1,027)	(500)	(2,276)
Payments to credit facilities	—)	—)	(78)	(31)	(320)
Net borrowings on (repayments of) commercial paper	—)	—)	—)	(198)	198)
Common stock repurchases	(1,504)	(3,705)	(490)	(744)	(1,263)
Cash dividends paid	(1,052)	(983)	(953)	(880)	(821)
Payments of employee taxes withheld from share-based awards	(50)	(34)	(66)	(65)	(85)
Other, net	(7)	(44)	(57)	(6)	(28)
Net cash provided by (used in) financing activities	(2,613)	(7,002)	(432)	(2,424)	(4,595)
Increase (decrease) in cash and cash equivalents	(953)	(1,377)	2,662)	666)	(9,646)
Cash and cash equivalents, beginning of year	3,530)	4,907)	2,245)	1,579)	11,225)
Cash and cash equivalents, end of year	2,577)	3,530)	4,907)	2,245)	1,579)

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).

Operating cash flow exhibits a general downward trend over the analyzed period, peaking at 4.3 billion USD in 2019 and 2020 before declining to 2.9 billion USD by 2022. This decline occurs despite a significant spike in net earnings during 2021, indicating that non-cash adjustments and working capital fluctuations have decoupled net income from actual cash generation.

Operating Performance and Cash Generation: Net earnings showed substantial volatility, with a peak of 7.0 billion USD in 2021 followed by a reduction to 4.9 billion USD in 2022. The divergence between net earnings and net cash provided by operating activities is most evident in 2021, where a large gain on the sale of business and significant mark-to-market pension adjustments negatively impacted the reconciliation of cash flows.; Working capital management shows consistent pressure from unbilled receivables, which reached a high negative impact of 646 million USD in 2022, suggesting a trend of increasing costs incurred but not yet billed to customers.
Investing Activities and Strategic Asset Management: Investing cash flows were dominated by major strategic shifts. A significant outflow of 8.9 billion USD occurred in 2018, primarily driven by the acquisition of Orbital ATK. This was countered in 2021 by a net cash inflow of 2.1 billion USD, largely resulting from the 3.4 billion USD divestiture of the IT services business.; Capital expenditures remained relatively stable and consistent, ranging between 1.2 billion USD and 1.4 billion USD annually, indicating a disciplined approach to maintaining and upgrading physical infrastructure.
Financing Activities and Shareholder Returns: Cash used in financing activities has been consistently negative, reflecting a strategy of debt repayment and shareholder remuneration. Cash dividends have increased steadily every year, rising from 821 million USD in 2018 to 1.05 billion USD in 2022.; Common stock repurchases have been utilized aggressively and inconsistently, with a notable peak of 3.7 billion USD in 2021. Debt management included a significant issuance of long-term debt in 2020 (2.2 billion USD), which was offset by recurring payments of long-term debt across most years.
Liquidity and Cash Position: The company's cash and cash equivalents experienced a sharp decline in 2018 due to acquisition activity, falling to 1.6 billion USD. Liquidity recovered to a peak of 4.9 billion USD by the end of 2020, but has since trended downward, ending at 2.6 billion USD in 2022.

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