10-QPeriod: Q1 FY2010

NORTHROP GRUMMAN CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2010

Filed April 28, 2010For Securities:NOC

Summary

Northrop Grumman Corporation (NOC) reported a strong first quarter for 2010, with total sales and service revenues increasing by 8.5% to $8.61 billion compared to the same period in 2009. This growth was primarily driven by a significant 21% increase in product sales, particularly within the Aerospace Systems and Shipbuilding segments. Net earnings rose to $469 million, or $1.53 per diluted share, a notable improvement from $389 million, or $1.17 per diluted share, in the prior year. The company's operating income also saw a healthy increase, up 23.5% to $765 million. This demonstrates effective cost management and operational improvements across key segments. Despite a decrease in service revenues, the overall financial performance indicates a robust business, supported by a substantial backlog of $67.5 billion, providing good visibility into future revenue streams. Investors can take comfort in the company's ability to grow revenue and profitability in a challenging economic environment, along with a continued focus on returning capital to shareholders through share repurchases and dividends.

Financial Highlights

46 data points
Beta

Revenue

$6.91B

56.8% Gross Margin

Net Income

$469.00M

6.8% Net Margin

EPS (Diluted)

$1.53

Total Assets

$29.76B

Cash & Equivalents

$1.96B

Free Cash Flow

-$634.00M

Financial Statements
Beta
Revenue$6.91B
Cost of Revenue$2.99B
Gross Profit$3.92B
Operating Income$680.00M
Net Income$469.00M
EPS (Basic)$1.55
EPS (Diluted)$1.53
Shares Outstanding (Basic)302.50M
Shares Outstanding (Diluted)306.10M

Key Highlights

  • 1Total sales and service revenues increased by 8.5% to $8.61 billion in Q1 2010 compared to Q1 2009.
  • 2Net earnings rose to $469 million ($1.53 per diluted share) from $389 million ($1.17 per diluted share) year-over-year.
  • 3Operating income increased by 23.5% to $765 million, indicating improved profitability.
  • 4Product sales saw a significant 21% increase, driven by growth in Aerospace Systems and Shipbuilding.
  • 5The company's backlog remained strong at $67.5 billion as of March 31, 2010, providing future revenue visibility.
  • 6Diluted earnings per share from continuing operations were $1.51, up from $1.10 in the prior year.
  • 7Share repurchases amounted to $507 million in the first quarter of 2010, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

The increase in sales and service revenues was primarily driven by a substantial 21% rise in product sales, especially from the Aerospace Systems and Shipbuilding segments. While service revenues saw a decrease, the growth in product sales more than offset this decline, leading to an overall revenue increase of 8.5%.

Profitability improved significantly. Net earnings increased by 20.6% to $469 million, and diluted earnings per share from continuing operations grew to $1.51 from $1.10. Operating income also saw a strong increase of 23.5% to $765 million, reflecting better operational performance and effective cost management.

Northrop Grumman maintained a substantial backlog of $67.5 billion as of March 31, 2010. This includes both funded and unfunded orders, providing significant visibility into future revenue and contract performance, which is a positive indicator for investors.

The company disclosed several ongoing legal matters and government investigations, including those related to the Deepwater Program, antitrust laws, and environmental issues. While the company believes the resolution of these matters would not have a material adverse effect on its financial position, results of operations, or cash flows, investors should monitor these developments as significant adverse outcomes are always a possibility in such complex legal environments.