01—Abstract
Summary
Summary of the 10-Q filed April 28, 2010. Cited figures are marked; the original filing is the authoritative source.
Northrop Grumman Corporation (NOC) reported a strong first quarter for 2010, with total sales and service revenues increasing by 8.5% to $8.61 billiona 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 millionb, 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 billionc, 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.
02—Key points
Key Highlights
- Total sales and service revenues increased by 8.5% to $8.61 billion in Q1 2010 compared to Q1 2009.
- Net earnings rose to $469 million ($1.53 per diluted share) from $389 million ($1.17 per diluted share) year-over-year.
- Operating income increased by 23.5% to $765 million, indicating improved profitability.
- Product sales saw a significant 21% increase, driven by growth in Aerospace Systems and Shipbuilding.
- The company's backlog remained strong at $67.5 billion as of March 31, 2010, providing future revenue visibility.
- Diluted earnings per share from continuing operations were $1.51, up from $1.10 in the prior year.
- Share repurchases amounted to $507 million in the first quarter of 2010, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2010, Northrop Grumman Corp kept $0.07.
- Revenue$6.91B100.0%
- Cost of revenue−$2.99B43.2%
- Gross profit$3.92B56.8%
- Operating costs−$3.24B46.9%
- Operating income$680.0M9.8%
- Interest, other & tax−$211.0M3.1%
- Net income$469.0M6.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2010filed April 28, 2010Financial Statements
Q1 FY2010 against Q1 FY2009
| Line item | Q1 FY2010Q1 FY2009 | Change |
|---|---|---|
| Revenue | $6.91B$7.93B | −12.9% |
| Cost of Revenue | $2.99B$3.63B | −17.7% |
| Gross Profit | $3.92B$4.30B | −8.7% |
| Operating Income | $680.00M$619.00M | +9.9% |
| Net Income | $469.00M$389.00M | +20.6% |
| EPS (Basic) | $1.55$1.19 | +30.3% |
| EPS (Diluted) | $1.53$1.17 | +30.8% |
| Shares Outstanding (Basic) | 302.50M326.90M | −7.5% |
| Shares Outstanding (Diluted) | 306.10M332.10M | −7.8% |
05—Questions
Frequently Asked Questions
What drove the increase in sales and service revenues in the first quarter of 2010?
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%.
How did the company's profitability change compared to the previous year?
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.
What is the company's outlook regarding its backlog?
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.
Are there any significant legal or contingent liabilities that investors should be aware of?
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.
06—Continue