Total Sales

11% decline (from $10,686M to $9,468M)

Total Sales fell by approximately 11% primarily due to lower overall production volumes and order timing differences in Q1 2025 compared to Q4 2024. This decline contrasts with higher sales in the previous quarter, where factors such as favorable program volumes boosted revenue. " "

Product Sales

12.6% decline (from $8,609M to $7,521M)

Product Sales dropped by roughly 12.6%, driven by reduced volumes across product lines—particularly in the space systems segments where program wind-downs and lower material timing affected orders. This continued the trend of lower product demand relative to the robust performance seen in Q4 2024. " "

Operating Income

47.5% decline (from $1,089M to $573M)

Operating Income shrank by 47.5% largely due to a significant $477M loss provision on the B-21 program in Q1 2025, an expense that was not present in Q4 2024. Additionally, margin pressures from reduced sales volumes further compounded the drop relative to the prior period. " "

Net Earnings

62% decline (from $1,264M to $481M)

Net Earnings plunged by 62%, reflecting the heavy impact of the B-21 loss provision combined with lower operating income and increased operating expenses. This steep drop mirrors the quarterly performance decline when compared to the previous quarter’s stronger earnings. " "

Basic EPS

Declined from $8.66 to $3.33

Basic EPS fell significantly from $8.66 to $3.33, which directly mirrors the substantial drop in net earnings. The impact of the B-21-related losses and lower operating profitability diluted earnings per share, contrasting with the higher EPS performance in Q4 2024. " "

Cash and Cash Equivalents

61% decline (from $4,353M to $1,685M)

Cash and Cash Equivalents decreased by approximately 61%, driven by heavy outflows in operating activities (notably a larger working capital drain and B-21 related cash adjustments), as well as significant financing outflows from debt repayments and share repurchases that were not as pronounced in Q4 2024. " "

Total Shareholders' Equity

Nearly unchanged (from $15,290M to $14,984M)

Total Shareholders' Equity remained relatively stable, with only a slight decrease. This stability occurred because the decline in retained earnings was largely offset by relatively stable other comprehensive items and balanced impacts from dividend payments and share repurchases compared to Q4 2024. " "

Sales Growth

FY 2025

3% to 4% organic growth "

3% to 4% organic growth; absolute sales range of $42B–$42.5B "

no change

Aeronautics Sales

FY 2025

Expected to be below $13B with mid‐single‐digit growth "

Mid‐single‐digit growth "

no change

Mission Systems Sales

FY 2025

Projected to grow mid‐single digits, reaching ~$12B "

Mid‐single‐digit growth "

no change

Defense Systems Sales

FY 2025

Projected in the low $8B range with double-digit organic growth "

Double-digit organic growth "

no change

Space Systems Sales

FY 2025

Expected to be roughly $11B "

Approximately $11B "

no change

Aeronautics Operating Margin

FY 2025

Mid‐ to high 9% range "

Low to mid 6% range "

lowered

Free Cash Flow

FY 2025

Expected to grow greater than 15% at the midpoint "

Reaffirmed guidance range of $2.85B–$3.25B "

no change

Estimated Tax Rate

FY 2025

Projected at low to mid‐17% "

Updated to high 16% "

lowered

International Sales

FY 2025

no prior guidance

Up 11% in Q1 2025 with strong bookings and a 1.45x book‑to‑bill ratio "

no prior guidance

International Sales Growth & Book-to-Bill Ratio

Q4 2024 called out double-digit international sales growth with ratios around 1.23x–1.4x " " ; Q3 2024 highlighted record international awards and robust backlog contributions " " ; Q2 2024 emphasized a strong pipeline converting to an over 1.5x book‐to‐bill ratio. " "

Q1 2025 reported international sales up 11% and a healthy international book‐to‐bill ratio of 1.45x, driven by programs such as IBCS and Triton. " "

Consistent and positive growth internationally with improved booking strength.

B-21 Program: Process Improvements and Cost Overruns

In Q4 2024, process improvements were highlighted without new cost overruns " " ; Q3 2024 noted steady process improvements with no unexpected overruns " ; Q2 2024 disclosed earlier cost charges (approximately $1.6 billion over five lots) alongside process improvements. " " "

Q1 2025 emphasized joint process improvements with the Air Force while reporting a $477 million pretax loss driven by higher manufacturing and inflationary costs. " " " "

Ongoing process improvements but with increased focus on managing rising cost overruns and inflation impacts.

Backlog and Order Pipeline Expansion

Q4 2024 reported a record backlog (around $91.5 billion) with strong international pipeline signals " " ; Q3 2024 noted an $85 billion backlog built on solid international awards " " ; Q2 2024 showed an $83 billion backlog driven by strong net awards and a robust pipeline. " " "

Q1 2025 reported a backlog of $92.8 billion with a significant expansion in the IBCS program and continued international pipeline strength. " " "

Steady and growing order pipeline with consistently strong backlog metrics.

Margin Performance and Segment Profitability

Q4 2024 showcased improved margins with overall segment operating margin rates around 11.1% and strong performance in DS, MS, and Space " " ; Q3 2024 reported the highest margins in over two years thanks to cost efficiencies " " ; Q2 2024 described stable margins across segments with targeted improvements. " " "

Q1 2025 saw overall margins affected by a significant B-21 adjustment (dropping overall margin to 6%), although segments like Defense Systems and Mission Systems maintained or improved profitability. " " "

Mixed performance: while most segments remain robust, the B-21 issue is weighing on overall margins.

Supply Chain and Macroeconomic Risks

Q3 2024 detailed broad-based supply chain challenges (capacity, productivity) and discussed anticipated improvements; Q2 2024 noted inflation headwinds and disruptions along with digital and supplier initiatives " " ; Q4 2024 did not prominently feature these topics.

Q1 2025 discussed trade policy mitigation, supplier agreements, and cited $200 million in cost efficiencies; inflation remained a challenge impacting production costs. " " "

Persistent macroeconomic headwinds with sustained efforts to mitigate supply chain risks.

Next-Generation Defense Platforms

Q4 2024 featured participation in the Navy’s F/A-XX process, sixth-generation aircraft ambitions, and NGAD contributions " " ; Q3 2024 included NGAD within the broader force structure review " ; Q2 2024 reaffirmed confidence in F/A-XX and sixth-generation readiness. "

Q1 2025 did not contain any specific discussion of these platforms.

Reduced emphasis or quieter disclosure on next-generation platforms in the current period.

Digital Enablement for Cost Efficiency

Q4 2024 highlighted digital ecosystems and tool sets driving cost reductions and improved agility " " ; Q3 2024 emphasized digital engineering, advanced production capabilities, and automation supporting margin gains " " ; Q2 2024 underlined digital enablement as a key tailwind de‐risking programs. " "

Q1 2025 reaffirmed that digital initiatives are driving $200 million in cost efficiencies and streamlining supplier and facility optimization. "

Consistent focus on digital transformation delivering ongoing cost efficiencies.

Sentinel/GBSD Program Restructuring and Oversight

Q4 2024 described an 18–24 month restructuring timeline with modest near-term impacts and gradual revenue contributions " " ; Q3 2024 detailed restructuring under a Nunn-McCurdy review and timing adjustments " ; Q2 2024 discussed detailed cost growth drivers and oversight improvements. " "

Q1 2025 noted continued progress in the Sentinel program with design maturation, missile testing, and restructuring partnerships aimed at reducing costs and schedules. " "

Ongoing restructuring with consistent progress and expectations for future efficiency gains.

Space Segment Program Challenges (Negative EAC Adjustments)

Q2 2024 reported improved EAC trends with smaller negative items " ; Q3 2024 identified a revenue decline with about $224 million headwind from winding down restricted programs alongside improved EAC performance " " ; Q4 2024 mentioned modest sales declines without detailed negative EAC adjustments. " "

Q1 2025 highlighted a $230 million headwind from the wind-down of two programs but also noted net favorable EAC improvements leading to an 11% operating margin. "

Persistent challenges from program wind-downs are being partially mitigated by improved EAC performance.

Solid Rocket Motor Overcapacity Risk

Q2 2024 detailed mitigation through funding alternate supply for ammonium perchlorate, reducing overcapacity risk " ; Q3 2024 noted increased capacity investments amid strong demand signals " ; Q4 2024 discussed incremental capacity expansion plans while expecting demand to absorb it. "

Q1 2025 addressed an incident at a Utah plant, clarifying that alternate sources exist and no program impact is expected. "

Consistent risk management and capacity balancing, with effective mitigation of overcapacity concerns.

Contract Award and Revenue Timing Uncertainty

Q2 2024 acknowledged “lumpiness” in awards and some uncertainty around contract timing " " ; Q3 2024 discussed delivery timing shifts and adjustments due to program restructuring " " " ; Q4 2024 noted uncertainties in programs like NGAD, Sentinel, and TACAMO while clearly detailing award delays. " " "

Q1 2025 reported delays in contract awards leading to a slower first-quarter sales ramp, but management expressed confidence in improvements later in the year. " " " "

Persistent uncertainty over contract awards with ongoing efforts to smooth timing, expected to improve in future quarters.

Advanced Mission Systems and IBCS Focus

Q4 2024 presented strong growth in Mission Systems with a 5% sales increase, margin improvements, and significant IBCS awards (e.g., $900 million for Poland’s system) " " " ; Q3 and Q2 had little detailed discussion on these topics.

Q1 2025 reiterated Mission Systems as a key focus with 6% sales growth and emphasized robust international IBCS demand with $10 billion potential. " " "

Stable strategic priority with consistent emphasis on innovation and international demand, with no clear decline in focus.