U.S. defense company Northrop Grumman (NOC.N) on Thursday raised its annual revenue target for the second time this year after its third-quarter earnings beat analysts' estimates helped by strong weapons demand.
The tense geopolitical landscape has created a strong global appetite for U.S. weaponry, with nations actively engaged in negotiations and striking deals to acquire arms and looking to speed up ongoing contracts. Increased defense spending by the U.S. and its allies benefited Northrop's topline.
Northrop's award volume in the reported quarter was $15 billion and the book-to-bill ratio, a comparison of orders received to units shipped and billed, was 1.53 to 1.
Sales in the company's Defense Systems segment rose 6%, helped by high demand for its ammunition and rocket motors used in guided multiple-launch rocket systems, which played a crucial role in supporting Ukraine's defense efforts against Russian forces.
Ramp up of development programs, primarily the Ground-Based Strategic Deterrent (GBSD), which aims to replace the aging ICBM system and its nuclear cruise missiles boosted sales at Northrop's Space Systems division by 11% to $3.51 billion.
The company's aeronautic systems business, which houses the high-profile B21 Raider jet program, posted a 9% rise in sales.
Northrop now expects 2023 revenue to be $39 billion, from its earlier projected range between $38.4 billion and $38.8 billion.
Overall profit in the third quarter was $937 million, or $6.18 per diluted share, compared with $915 million, or $5.89 per diluted share, a year earlier.
Analysts were expecting a profit of $5.81 per share, according to LSEG data.
Quarterly sales jumped 9% to $9.78 billion, ahead of estimates of $9.58 billion.
Northrop joined other defense contractors Lockheed Martin (LMT.N), RTX (RTX.N), and General Dynamics (GD.N) in reporting better-than-expected quarterly results.
Northrop's shares were up about 1% at $488 before the bell.
