Summary
Northrop Grumman Corporation (NOC) reported solid financial results for the third quarter and the first nine months of 2017, demonstrating continued revenue and earnings growth. Total sales increased by 6% year-over-year for both the quarter and year-to-date periods, reaching $6.53 billion and $19.17 billion, respectively. Net earnings also saw a healthy increase, growing 7% for the quarter to $645 million and 10% year-to-date to $1.84 billion. Diluted Earnings Per Share (EPS) showed an even stronger performance, up 10% for the quarter to $3.68 and 13% year-to-date to $10.46. The company's outlook is significantly influenced by the pending acquisition of Orbital ATK, Inc., announced in September 2017 for approximately $7.8 billion in cash plus the assumption of $1.4 billion in net debt. This strategic move is expected to broaden NOC's capabilities and is anticipated to close in the first half of 2018. To finance this acquisition, NOC completed an $8.25 billion debt offering in October 2017. Despite overall positive financial trends, investors should note the slight decrease in operating margin rate for the quarter to 12.9% from 13.4% in the prior year, primarily due to increased unallocated corporate expenses. However, the year-to-date operating margin improved slightly to 13.2% from 13.0%. The company continues to manage its capital effectively, with a remaining share repurchase authorization of $2.3 billion under its 2015 program.
Financial Highlights
48 data points| Revenue | $6.53B |
| Cost of Revenue | $3.15B |
| Gross Profit | $3.37B |
| Operating Income | $829.00M |
| Net Income | $750.00M |
| EPS (Basic) | $4.31 |
| EPS (Diluted) | $4.28 |
| Shares Outstanding (Basic) | 174.20M |
| Shares Outstanding (Diluted) | 175.30M |
Key Highlights
- 1Total sales for Q3 2017 increased 6% to $6.53 billion; year-to-date sales grew 6% to $19.17 billion.
- 2Net earnings increased 7% in Q3 2017 to $645 million; year-to-date net earnings rose 10% to $1.84 billion.
- 3Diluted EPS grew 10% for the quarter to $3.68 and 13% year-to-date to $10.46.
- 4The company announced a definitive agreement to acquire Orbital ATK for approximately $7.8 billion in cash plus $1.4 billion in net debt, expected to close in H1 2018.
- 5Northrop Grumman completed an $8.25 billion unsecured senior notes issuance in October 2017 to finance the Orbital ATK acquisition.
- 6Operating income saw a modest 2% increase for the quarter to $845 million, but a stronger 7% increase year-to-date to $2.53 billion.
- 7Aerospace Systems segment sales grew 11% for the quarter and 12% year-to-date, driven by Manned Aircraft and Space programs.