Total backlog increased by 9% YoY, driven by Aeronautics and Defense Systems. This suggests strong demand for the company's products and services and provides a solid foundation for future revenue generation.

The company realigned the Strategic Deterrent Systems (SDS) division from Space Systems to Defense Systems, and subsequently realigned the Strike and Surveillance Aircraft Solutions (SSAS) business unit from Defense Systems to Aeronautics Systems. These realignments suggest a strategic effort to optimize operational efficiency and market positioning.

The company entered into a definitive agreement to sell the Immersive Mission Solutions (IMS) operating unit of Defense Systems for $327 million in cash. The transaction, which is subject to final government approvals and closing conditions, is expected to be completed mid-year 2025 and will result in an after-tax gain of approximately $150 million.

The company reviewed its estimated profitability on the B-21 program and made no significant changes to the previously recognized loss. This indicates ongoing challenges in managing the program's costs and performance.

The Sentinel program was certified for continuation by the DoD upon completion of the Nunn-McCurdy breach review, indicating management's ability to address and resolve significant program challenges.

The company is proactively working to mitigate challenges caused by the macroeconomic environment, including seeking economic price adjustment clauses and recovering on requests for equitable adjustments. This indicates a proactive approach to managing external risks.

The company derived 87% of its sales from the U.S. government in 2024, making it highly susceptible to changes in government spending priorities and budget constraints. This concentration poses a material risk to the company's financial performance.

The company acknowledges that contract cost growth, especially without comparable revenue increases, can adversely affect operating income. This risk is amplified by macroeconomic factors and the inherent complexity of long-term contracts.

As a defense contractor, the company faces significant cyber and other security threats, which could lead to losses, misuse of information, disruptions, and reputational damage. The sophistication and use of artificial intelligence by threat actors present an increased level of risk.

The company anticipates it will continue to see increased competition in some of its core markets, especially as a result of customers' budget pressures, their focus on affordability and competition, and the company's own success in winning business.

The company is facing increasing competition in the U.S. and outside the U.S. from U.S., foreign and multinational firms, including new entrants, and anticipates that mergers or acquisitions within the industry could further increase competition or could limit the company's access to certain suppliers without appropriate remedies to protect the company's interests.

The company relies on other companies to provide raw materials, chemicals, parts and components and subsystems for its products, produce hardware elements and sub-assemblies, provide software and intellectual property, provide information about the parts they supply to the company, and perform some of the services the company needs for its operations or provide to its customers.

The company continues to work proactively to mitigate the challenges caused by the macroeconomic environment, including, in some cases, seeking the inclusion of economic price adjustment clauses or seeking to recover on requests for equitable adjustments, engineering change proposals or other claims.

The company's success in competing depends, in part, on its ability to remain cost-competitive, respond to changes in customer acquisition strategies, accurately anticipate its customers' needs and successfully effect its digital transformation strategy and adopt and integrate new digital technologies into its manufacturing, operations, and products and services.

The company is working to mitigate the challenges caused by the macroeconomic environment, including, in some cases, seeking the inclusion of economic price adjustment clauses or seeking to recover on requests for equitable adjustments, engineering change proposals or other claims.

The company's future success depends, in part, on its ability to innovate, develop new products and technologies, progress and benefit from digital transformation and maintain technologies, facilities and equipment to win new competitions and meet the needs of its customers.

The company aims to ensure that its technical solutions are responsibly developed, tested and operated. Problems and delays in the successful development and delivery of the company's solutions, including as a result of issues with design, technology or operations, digital transformation, inability to achieve learning curve assumptions, artificial intelligence, manufacturing materials or components, or subcontractor (or other supplier) performance can prevent the company from meeting requirements and create significant risk and liabilities.

The company protects its technological innovations using a combination of trade secrets, patents, trademarks, and copyrights. The company routinely applies for patents related to the technologies it develops in the U.S. and in certain foreign jurisdictions.

The company's board of directors authorized a new share repurchase program of up to an additional $3.0 billion in share repurchases of the company's common stock (the “2024 Repurchase Program”).

In May 2024, the company increased the quarterly common stock dividend 10 percent to $2.06 per share from the previous amount of $1.87 per share.

The company is focused on the efficient conversion of operating income into cash to provide for the company's material cash requirements, including working capital needs, satisfaction of contractual commitments, funding of its pension and OPB plans, investment in its business through capital expenditures, and shareholder return through dividend payments and share repurchases.

The company has set a goal to achieve net zero greenhouse gas emissions in its operations by 2035 and is committed to working to achieve its climate change and other sustainability goals.

The company is working to identify opportunities to utilize alternatives to fossil-based energy sources, to decrease its greenhouse gas emissions, to reduce its consumption of water and generation of waste, and to ensure its compliance with environmental regulations where it operates, enhancing its record of environmental sustainability.

The company may be subject to substantial administrative, civil or criminal fines, penalties or other sanctions (including suspension, debarment or disqualification) for violations of environmental laws.

The company believes the current global security environment highlights the significant national security threats to the U.S. and its allies, and the need for strong deterrence and robust defense capabilities, and are actively evaluating both opportunities and risks associated with this environment.

Economic tensions and changes in international trade policies, including higher tariffs on imported goods and materials, the imposition of retaliatory tariffs or other trade protection measures and renegotiation of free trade agreements, could also further impact the global market for defense products, services and solutions.

The U.S. political environment may also impact defense budgets and priorities, issues related to the national debt, and government spending more broadly.