Summary
Northrop Grumman Corporation (NOC) reported its financial results for the second quarter and first six months of 2014. Total sales for the quarter decreased by 4% to $6.04 billion compared to the same period in the prior year, and for the six-month period, sales decreased by 4% to $11.89 billion. Despite the decline in sales, operating income saw a modest increase of 1.9% to $820 million for the quarter and a 5.8% increase to $1.67 billion for the six months. This improvement was driven by favorable net adjustments in contract estimates and improved performance in certain segments, particularly Information Systems, which offset lower sales volumes in segments like Aerospace Systems and Electronic Systems. Net earnings for the quarter rose by 4.7% to $511 million ($2.37 per diluted share), and for the six-month period, net earnings increased by 11.6% to $1.09 billion ($5.01 per diluted share). This earnings growth, despite lower sales, is attributed to improved operating margins and a favorable effective tax rate in the six-month period due to a tax benefit from the resolution of an IRS examination. The company continued its focus on returning capital to shareholders, repurchasing $1.3 billion of stock in the first six months and increasing its quarterly dividend. The company maintained a strong liquidity position with $3.48 billion in cash and cash equivalents.
Financial Highlights
47 data points| Revenue | $6.04B |
| Cost of Revenue | $2.67B |
| Gross Profit | $3.37B |
| Operating Income | $820.00M |
| Net Income | $511.00M |
| EPS (Basic) | $2.41 |
| EPS (Diluted) | $2.37 |
| Shares Outstanding (Basic) | 212.40M |
| Shares Outstanding (Diluted) | 215.20M |
Key Highlights
- 1Total sales decreased by 4% to $6.04 billion for the quarter and $11.89 billion for the first six months of 2014 compared to the prior year periods.
- 2Operating income increased by 1.9% to $820 million for the quarter and by 5.8% to $1.67 billion for the six months, driven by favorable contract estimate adjustments and segment performance improvements.
- 3Diluted earnings per share increased to $2.37 for the quarter (up 16%) and $5.01 for the six months (up 23%), benefiting from higher net earnings and a reduced share count due to buybacks.
- 4The company resolved a significant portion of its 2007-2009 IRS tax examination, resulting in a $51 million income tax benefit for the six-month period, lowering the effective tax rate.
- 5Significant share repurchases continued, with $1.3 billion executed in the first six months of 2014, contributing to the decrease in weighted-average shares outstanding and boosting EPS.
- 6The company announced a 15% increase in its quarterly common stock dividend to $0.70 per share in May 2014.
- 7Total backlog stood at $35.56 billion as of June 30, 2014, a decrease of 4% from December 31, 2013, reflecting timing of awards.