Summary
Northrop Grumman Corporation (NOC) reported financial results for the second quarter and first half of 2016. For the three months ended June 30, 2016, total sales increased by 2% to $6.0 billion compared to the prior year, while net earnings decreased by 3% to $517 million. Diluted earnings per share saw a 4% increase to $2.85, driven by lower share counts from buybacks. For the six months ended June 30, 2016, sales grew by 1% to $11.96 billion, and net earnings increased by 6% to $1.07 billion, with diluted EPS rising 14% to $5.88. Operating income for the quarter declined 2% to $797 million, and the operating margin rate compressed slightly to 13.3% from 13.8%. This was primarily due to increased operating costs and expenses as a percentage of sales. The effective tax rate for the year-to-date period was significantly lower due to the adoption of new accounting standards related to share-based payments and the extension of the research tax credit, partially offset by the absence of prior year refund claims. The company also reported a substantial improvement in operating cash flow for the first half of the year, generating $544 million compared to a use of $28 million in the prior year, largely due to a significant pension contribution made in the prior year and improved working capital management.
Financial Highlights
48 data points| Revenue | $6.00B |
| Cost of Revenue | $2.62B |
| Gross Profit | $3.38B |
| Operating Income | $797.00M |
| Net Income | $517.00M |
| EPS (Basic) | $2.87 |
| EPS (Diluted) | $2.85 |
| Shares Outstanding (Basic) | 180.10M |
| Shares Outstanding (Diluted) | 181.50M |
Key Highlights
- 1Total sales for the second quarter of 2016 increased by 2% to $6.0 billion year-over-year.
- 2Net earnings for the second quarter decreased by 3% to $517 million, while diluted EPS increased by 4% to $2.85.
- 3For the first six months of 2016, sales grew 1% to $11.96 billion and net earnings increased 6% to $1.07 billion.
- 4Operating income for the quarter declined by 2% to $797 million, with operating margin rate decreasing to 13.3% from 13.8%.
- 5Operating cash flow for the first six months of 2016 was a strong positive $544 million, a significant improvement from -$28 million in the prior year.
- 6The company repurchased $0.4 billion of its stock under the 2015 Repurchase Program as of June 30, 2016, with $3.6 billion remaining authorization.
- 7A significant portion of the effective tax rate reduction for the year-to-date period was due to the adoption of ASU No. 2016-09, related to share-based payment accounting.