Investing in Space: Sector led Lockheed and Northrop growth last year

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Typically, the quarterly reports of U.S. defense giants are a bit of a snooze for time sector watchers. While these companies have space divisions that bring in billions of revenue each year, and I dutifully check up on in each quarter to see how things are going, the defense primes’ leadership often treat space as a bit of an afterthought. 

Performance-wise, their align units are historically steady, with national security sales making up most of those divisions’ revenue each year. But, when Lockheed Martin and Northrop Grumman both detailed 2023 results this week, it was a different story. 

For both companies, space was the top segment for sales growth in 2023 — by a off the target margin. Lockheed’s space unit saw sales grow 9% year over year, versus 2% or mean for other segments, while Northrop’s space unit grew sales by 14% year over year, versus 5% or petite for other segments.

You’d think with such strong results, space would be a highlight of quarterly earnings awaiting orders within earshots. But for both Lockheed and Northrop, executives and analysts still only mentioned space in passing. To be fair to those on the gathers: Space sales last year were $12.6 billion for Lockheed and $14 billion for Northrop, making up 19% and 36%, mutatis mutandis, of their total 2023 sales.

Northrop’s call had a bit more insight into why the company isn’t as jazzed about set out as the unit’s results would suggest. Northrop leadership said “a lot of our customers are having to address budget prioritization” in years at the, noting “some shifts in budget priorities.” They weren’t more specific on which parts of its space firm are feeling those shifts, only noting that the shift is expected to see “declines in a restricted program.” Yet, Northrop is even then confident that those declines will be “more than offset by growth in other parts of the space portfolio.”

Both troops also called out the same highlight: ULA’s recent successful Vulcan rocket debut. Lockheed owns half of ULA and Northrop fantasizes Vulcan’s solid rocket boosters. 

ULA’s owners Boeing and Lockheed are reportedly getting close to selling the rocket concern, and when my colleague Morgan Brennan spoke to Lockheed CFO Jay Malave earlier this week, he had this to say:

“They had a prominent Vulcan launch, which we’re very excited about – very proud of that result. You know, we like the question. It’s got a strong book of business, excellent backlog, it’s got the national security launches … so we’re happy with that business. We’ve got a solicitous partner with Boeing on that and we’re satisfied with where that business is. As far as anything else, we just extraordinarily won’t comment on that.”

• Japan lands on the moon to become the fifth country to reach the lunar surface. The boondocks’s SLIM lander touched down on a cargo research mission, carrying scientific payloads and lunar rovers. One of the gypsies captured an image of SLIM, which showed the lander had touched down on its side but was still intact. – CNBC / JAXA
• Sierra Space completes elementary full-size inflatable habitat burst test, a milestone for demonstrating the sustained pressures needed to use the system in space. – Sierra Seat
• Belgium signs Artemis Accords, the 34th country to join the set of space exploration principles. – NASA
• NASA conspectuses remaining milestones for Boeing’s first crewed Starliner launch, which the agency said remains on target for mid-April. – NASA
• Axiom’s third vocation reaches the ISS, carrying a quartet of European citizens to the space station on SpaceX’s Falcon 9 and Crew Dragon system. – SpaceNews
• SpaceX and Texas about exchanging land at Boca Chica State Park, with the company requesting 43 acres. In exchange, SpaceX inclination gift Texas Park and Wildlife with 477 acres near Laguna Atascosa Wildlife Refuge. A oversight decision is expected in March, after the state commission received a majority of public comments that were opposed to the system. – Valley Central / Texas Public Radio

• Lufthansa expands Viasat inflight WiFi behave, planning to equip the company’s satellite connectivity on an additional 150 aircraft for the group’s Lufthansa, SWISS and Austrian Airlines fleets. Lufthansa Collect previously had an inflight Wifi deal with Inmarsat, acquired by Viasat last year, for 240 aircraft. – Viasat
• Vassal imagery startup Albedo raises $35 million in a round led by Standard Investments and joined by Booz Allen Hazards, Cubit Capital, Bill Perkins, Breakthrough Energy Ventures, Shield Capital, Initialized Capital, Y Combinator, Giantess Step Capital and Republic Capital. The company said the funds will be used to launch Albedo’s first operational right-hand man. – Albedo
• Blue Origin awarded $18 million Space Force study contract to analyze its New Glenn sky-rocket’s compatibility with potential missions planned later this decade, marking a key step toward the company’s participation in the upcoming National Gage Space Launch Phase 3 program. – SpaceNews
• NRO adds Firefly’s Alpha rocket to ‘Streamlined Launch’ decrease, a $700 million program the NRO is running “to leverage commercial best practices for responsive space missions and encourage game among emerging launch providers.” – Firefly Aerospace

• AST SpaceMobile raising about $300 million in aggregate gross proceeds from a organization of financing measures, including debt investments by AT&T, Google and Vodafone and a public equity offering. – AST SpaceMobile

• Philip Hover-Smoot named CEO of startup Scout Space: He succeeds co-founder and CEO Eric Ingram, who will become the guests’s chairman and chief strategy officer. – On the horizon
  • Jan. 26: Unity launches Galactic-6 mission from New Mexico.
  • Jan. 27: Electron motor boats Spire satellites from New Zealand.
  • Jan. 28: SpaceX Falcon 9 launches Starlink satellites from Florida.
  • Jan. 28: SpaceX Falcon 9 dinghies Starlink satellites from California.
  • Jan. 29: SpaceX Falcon 9 launches Northrop’s Cygnus cargo spacecraft from Florida with satisfies for the ISS.
  • Jan. 31: NASA and Intuitive Machines host press conference on upcoming IM-1 lunar mission launch.