Summary
Northrop Grumman Corporation (NOC) reported a decrease in sales and service revenues for the second quarter and first half of 2011 compared to the prior year, primarily driven by lower volumes across its four reporting segments and reduced participation in the NSTec joint venture. Despite the revenue decline, operating income showed resilience, with total operating income increasing slightly in the first half due to performance improvements in Aerospace Systems and Electronic Systems, and the impact of the NSTec JV change. A significant event for the quarter was the completion of the spin-off of the Shipbuilding business (Huntington Ingalls Industries) as of March 31, 2011, which is now reported under discontinued operations. This transaction resulted in a substantial cash contribution to Northrop Grumman. The company also continued its focus on capital allocation through share repurchases and dividend increases, alongside managing its debt profile. Looking ahead, the company faces a dynamic environment characterized by U.S. government budget constraints and ongoing discussions regarding deficit reduction. Management believes Northrop Grumman is well-positioned to meet future defense needs, with a development portfolio aligned with emerging DoD priorities such as anti-access/area denial capabilities and cybersecurity.
Financial Highlights
48 data points| Revenue | $6.56B |
| Cost of Revenue | $2.86B |
| Gross Profit | $3.70B |
| Operating Income | $841.00M |
| Net Income | $520.00M |
| EPS (Basic) | $1.84 |
| EPS (Diluted) | $1.81 |
| Shares Outstanding (Basic) | 282.60M |
| Shares Outstanding (Diluted) | 287.20M |
Key Highlights
- 1Total sales and service revenues decreased by 9.6% ($695 million) in Q2 2011 and 5.9% ($875 million) in the first half of 2011 compared to the prior year, primarily due to lower volume across all segments and reduced participation in the NSTec joint venture.
- 2Operating income increased by 12.1% ($91 million) in Q2 2011 and 16.1% ($223 million) in the first half of 2011, reflecting improved performance in key segments and cost management.
- 3Completed the spin-off of its Shipbuilding business (Huntington Ingalls Industries) on March 31, 2011, which is now classified as discontinued operations. The company received a $1.4 billion cash contribution from HII in connection with the spin-off.
- 4Diluted earnings per share from continuing operations decreased to $1.81 in Q2 2011 and $3.48 in the first half of 2011, compared to $2.44 and $3.77 respectively in the prior year, partly due to the absence of a significant tax benefit realized in 2010.
- 5The company repurchased approximately $1 billion of its common stock under an accelerated share repurchase agreement in Q2 2011 and increased its quarterly dividend.
- 6Total backlog stood at $41.8 billion at June 30, 2011, a decrease from $46.8 billion at December 31, 2010, reflecting contract awards and adjustments related to the NSTec JV and NPOESS program.
- 7The company highlighted ongoing U.S. government budget discussions and potential impacts of debt ceiling limitations as key risks to future revenue and operations.