Summary
Northrop Grumman Corporation reported stable total sales for the first nine months of 2015 compared to the same period in 2014, with $17.832 billion in sales. However, operating income saw a slight decrease to $2.387 billion from $2.434 billion, impacting diluted earnings per share, which rose to $7.89 from $7.28 due to a significant reduction in outstanding shares from robust share repurchase programs. The company's balance sheet shows a notable decrease in cash and cash equivalents, from $3.863 billion at the end of 2014 to $1.292 billion by September 30, 2015, largely due to substantial share repurchases and a voluntary pension contribution. Financially, the company demonstrated solid operational execution with a focus on returning capital to shareholders. The significant share buybacks, coupled with a stated intention to continue them, along with a consistent dividend payout, signal management's confidence in future cash flows and profitability. Investors should note the company's reliance on U.S. Government contracts and the potential impact of evolving defense budgets and appropriations, which are discussed as key risks. The ongoing environmental remediation liabilities represent a material contingent liability that, while managed, warrants investor attention.
Financial Highlights
48 data points| Revenue | $5.98B |
| Cost of Revenue | $2.63B |
| Gross Profit | $3.35B |
| Operating Income | $794.00M |
| Net Income | $516.00M |
| EPS (Basic) | $2.78 |
| EPS (Diluted) | $2.75 |
| Shares Outstanding (Basic) | 185.80M |
| Shares Outstanding (Diluted) | 187.90M |
Key Highlights
- 1Total sales remained stable year-over-year for the nine months ended September 30, 2015, at $17.832 billion.
- 2Diluted Earnings Per Share (EPS) increased to $7.89 for the nine months ended September 30, 2015, up from $7.28 in the prior year period, primarily driven by a significant reduction in outstanding shares due to share repurchases.
- 3The company actively returned capital to shareholders, repurchasing approximately $2.864 billion in common stock and paying $458 million in dividends during the nine months ended September 30, 2015.
- 4Cash and cash equivalents decreased substantially from $3.863 billion at December 31, 2014, to $1.292 billion at September 30, 2015, impacted by share repurchases and a $500 million voluntary pension contribution.
- 5Operating income for the nine months ended September 30, 2015, decreased slightly to $2.387 billion from $2.434 billion in the prior year period, impacted by lower segment operating income and an increase in general and administrative expenses.
- 6The Aerospace Systems segment experienced a decrease in operating income and margin rate, primarily due to the absence of a prior-year settlement benefit and lower CAS pension costs.
- 7Environmental remediation liabilities are estimated to range between $351 million and $794 million, with $368 million accrued as of September 30, 2015.