Northrop takes $397 million B-21 charge to accelerate production rates, prep for program increase

A manufacturing process change that will allow Northrop Grumman to reduce risk, increase production rates, and set the foundation for expanded production numbers of the B-21 stealth bomber beyond current plans helped lead to a $397 million after-tax loss on the Air Force program in the first quarter, the company said on Tuesday.

The manufacturing change relates to the first five low-rate initial production (LRIP) options for the bomber, including a $226 million pre-tax reserve on the first two lots. On top of the change, Northrop Grumman said the B-21 charge also accounts for higher than expected prices and “consumption” of “general procurement materials” due to macroeconomic factors and lessons learned so far in initial aircraft production, Kathy Warden, Northrop Grumman’s chairwoman, president, and CEO, said on the company’s earnings call.

Current plans call for 100 B-21s although the Air Force has said it is considering increasing production beyond that and the process change provides “optionality” for this, Warden said. It will help the customer “de-risking options beyond the program of record,” she said.

Gen. Anthony Cotton, commander of the Strategic Command, said at the recent Strategic Posture hearing with the House Armed Services Strategic Forces subcommittee in early April that while the program of record calls for a minimum of 100 B-21s, he specifically wants 145 of the stealth bombers.

The B-21 is designed to have the dual capability of carrying both conventional and nuclear weapons, which the National Nuclear Security Administration is responsible for producing and maintaining. As of October, the 2025 Stockpile Stewardship Management Plan said that the B61-12 life extension program, which completed its last production unit in December, is continuing to certify the B-21 to carry the gravity bomb.

Overall, in the quarter, net income tumbled 49% to $481 million, $3.32 earnings per share (EPS) from $944 million ($6.32 EPS), far below consensus estimates of $6.24 EPS. In addition to the B-21 charge, earnings also declined on lower operating profit in the Space Systems segment—down on lower sales—and the Mission Systems segment—off on investments in classified business opportunities and lower sales in microelectronics.

Segment operating margins were 6% versus 10.1% a year ago, reflecting the B-21 charge and operations at the Mission Systems segment.

Sales in the quarter fell 7% to $9.5 billion from $10.1 billion a year ago, with the B-21 being a $100 million headwind.

The outlook for sales in 2025 is unchanged at between $42 billion and $42.5 billion and the same with free cash flow, which is forecast in the $2.9 billion to $3.3 billion range. However, segment operating income is now expected to be between $4.2 billion and nearly $4.4 billion, down from the prior range of nearly $4.7 billion to $4.8 billion. Adjusted earnings are forecast between $24.95 and $25.35 EPS, down a dime from previous guidance.

A version of this article was first published in Exchange Monitor affiliate Defense Daily.