Summary
Northrop Grumman Corporation's (NOC) 2017 10-K filing highlights a strong year of sales growth driven by its Aerospace Systems and Mission Systems segments. The company is on track to acquire Orbital ATK in the first half of 2018, a move expected to broaden its capabilities and create shareholder value. Despite a challenging global security environment, NOC continues to secure major U.S. government contracts, which represent 85% of its total sales. The company is focused on innovation and maintaining its leading position in defense and security solutions. Financially, the company reported increased sales and operating income, though net earnings saw a slight decrease primarily due to a higher effective tax rate resulting from the Tax Cuts and Jobs Act of 2017. Backlog remained substantial at $42.9 billion at year-end 2017. Key risks include continued dependence on U.S. government spending, appropriations, and potential regulatory changes. The company's strategic investments in R&D underscore its commitment to future technological advancements.
Financial Highlights
54 data points| Revenue | $25.80B |
| Cost of Revenue | $12.27B |
| Gross Profit | $13.53B |
| R&D Expenses | $639.00M |
| Operating Income | $3.22B |
| Net Income | $2.87B |
| EPS (Basic) | $16.45 |
| EPS (Diluted) | $16.34 |
| Shares Outstanding (Basic) | 174.40M |
| Shares Outstanding (Diluted) | 175.60M |
Key Highlights
- 1Reported total sales of $25.8 billion for 2017, a 5% increase from 2016, primarily driven by higher sales in Aerospace Systems and Mission Systems.
- 2Anticipates the closing of the Orbital ATK acquisition in the first half of 2018, which is expected to create a fourth business sector named Northrop Grumman Innovation Systems.
- 3The U.S. Government accounted for 85% of sales in 2017, indicating significant reliance on government contracts.
- 4Total backlog stood at $42.9 billion at the end of 2017, down slightly from $45.3 billion in 2016, but representing a substantial order book.
- 5Invested 2.5% of sales in company-sponsored R&D, reflecting a commitment to innovation and future technological development.
- 6Experienced an increase in operating income to $3.3 billion, a 3% rise from 2016, alongside a slight decrease in operating margin rate to 12.8%.
- 7Recognized a tax expense of $300 million due to the Tax Cuts and Jobs Act of 2017, contributing to a higher effective tax rate and a decrease in net earnings for the year.