Summary
Northrop Grumman Corporation (NOC) reported its second-quarter 2009 financial results, showing a mixed performance. While total sales and service revenues saw an increase year-over-year for both the quarter and the year-to-date, driven primarily by growth in the Aerospace Systems, Electronic Systems, and Information Systems segments, profitability faced some headwinds. Operating income for the quarter declined due to significant charges in the Shipbuilding segment related to cost growth on LPD-class ships and LHA 6. However, for the six-month period, operating income improved due to the reversal of prior-year charges in Shipbuilding. The company demonstrated a strong commitment to shareholder returns, increasing its quarterly common stock dividend and continuing its share repurchase program. Despite a decrease in cash provided by operating activities for the six months, likely due to discretionary pension contributions, the company maintained a healthy free cash flow, suggesting continued financial flexibility. Investors will likely monitor the impact of ongoing defense budget discussions and the company's ability to manage costs within its shipbuilding operations.
Financial Highlights
46 data points| Revenue | $8.54B |
| Cost of Revenue | $4.34B |
| Gross Profit | $4.20B |
| Operating Income | $614.00M |
| Net Income | $394.00M |
| EPS (Basic) | $1.22 |
| EPS (Diluted) | $1.21 |
| Shares Outstanding (Basic) | 322.00M |
| Shares Outstanding (Diluted) | 325.80M |
Key Highlights
- 1Total sales and service revenues increased by approximately 3.8% for the quarter ($8.96 billion vs. $8.63 billion) and 5.7% year-to-date ($17.28 billion vs. $16.35 billion).
- 2Operating income for the quarter decreased by 19% to $653 million, primarily impacted by a $105 million pre-tax charge in the Shipbuilding segment.
- 3Diluted earnings per share from continuing operations were $1.21 for the quarter, down from $1.40 in the prior year, but increased to $2.38 year-to-date from $2.15.
- 4The company increased its quarterly common stock dividend from $0.40 to $0.43 per share.
- 5Share repurchases continued, with approximately 5.8 million shares bought back in the second quarter for $275 million, and $508 million remaining under the current authorization.
- 6Net cash provided by operating activities decreased by 18.6% for the six-month period to $658 million, impacted by discretionary pension contributions.
- 7Backlog remained substantial, totaling approximately $70.4 billion at the end of the quarter, though down from $78.1 billion at the end of 2008.