Summary
Northrop Grumman Corporation's (NOC) 2019 10-K filing highlights a year of significant sales growth, primarily driven by the full-year integration of the acquired Orbital ATK business, now known as Innovation Systems. The company's revenue increased by 12% to $33.84 billion, demonstrating its expanded capabilities across its four key segments: Aerospace Systems, Innovation Systems, Mission Systems, and Technology Services. Operating income saw a 5% increase, though the operating margin rate saw a slight decrease due to increased mark-to-market pension expenses and unallocated corporate costs, partially offset by improved segment performance. The company's heavy reliance on the U.S. government as its primary customer, accounting for 83% of sales, remains a significant factor. However, Northrop Grumman maintains a robust backlog of $64.8 billion, indicating strong future revenue potential. The company also highlighted its commitment to shareholder returns through share repurchases and dividend increases. Key strategic priorities include continued investment in research and development, particularly in advanced technologies like autonomous systems, cyber, space, and strike capabilities, to maintain its competitive edge in the global security market.
Financial Highlights
53 data points| Revenue | $33.84B |
| R&D Expenses | $953.00M |
| Operating Expenses | $29.87B |
| Operating Income | $3.97B |
| Net Income | $2.25B |
| EPS (Basic) | $13.28 |
| EPS (Diluted) | $13.22 |
| Shares Outstanding (Basic) | 169.30M |
| Shares Outstanding (Diluted) | 170.00M |
Key Highlights
- 1Total sales increased by 12% to $33.84 billion in 2019, largely due to the full-year inclusion of the acquired Orbital ATK (Innovation Systems) segment.
- 2The company ended 2019 with a strong backlog of remaining performance obligations totaling $64.8 billion, an increase of 21% from the prior year.
- 3Northrop Grumman's heavy dependence on the U.S. government as its primary customer persisted, representing 83% of total sales.
- 4Operating income rose 5% to $3.97 billion, though the operating margin rate decreased to 11.7% from 12.6% due to higher pension expenses and corporate costs.
- 5The company continued its return of capital to shareholders, with share repurchases and a 10% increase in its quarterly dividend.
- 6Significant investments were made in company-sponsored research and development, totaling $953 million, reflecting a focus on innovation in key areas like autonomous systems, cyber, and space.
- 7The company experienced a substantial increase in mark-to-market pension and other postretirement benefit expenses, which negatively impacted net earnings.