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company's backlog now stands at $60.4 Billion. "Sales growth,
higher segment operating margin, and lower corporate expenses
drove this quarter's earnings increase" said Ronald D.
Sugar, Northrop Grumman chairman and chief executive officer.
He said the company is on track with its guidelines and, based
on year-to-date results, he expects "both cash from operations
and free cash flow to be in the upper end of our 2007 guidance
range".
All the company's business units increased their
operating margins, with Information & Services outperforming
all other units with 15% increase. Yet, the Aerospace unit's
sales declined 6% from the prior year period, due to lower volume
in the Integrated Systems division, reflecting changing status
of some of its major operations, including E-2D, F-35
and EA-18G, the J-UCAS
program nearing completion and planned reductions in the E-10A
platform and related MP-RTIP efforts.
Electronics unit operations increased by 7%, mainly
from Army and some classified programs, however, it was negatively
affected by about $50 million from contract earnings adjustment
of elements related to the F-16 Block 60 fixed price development
program, ASPIS II EW and MESA radar systems. Second quarter
2007 shipbuilding and naval operations sales declined 5% from
the prior year period due to lower volume in the DDG 51 and
LHD programs which also suffered from the strike at the company's
Pascagoula, Miss. Shipyard.
April 24, 2007: Northrop
Grumman Corporation (NYSE:NOC) reported that first quarter 2007
income from continuing operations was $387 million, or $1.10
per diluted share, (up 7% from $362 million, or $1.03 per diluted
share, in Q1/06). Sales for the period increased 4 percent to
$7.3 billion.
Funded contract acquisitions for the 2007 first quarter totaled
$9 billion compared with $12.3 billion for the same period of
2006. First quarter 2006 funded contract acquisitions were positively
impacted by the receipt of awards deferred from the fourth quarter
of 2005 due to the delay in the passage of the 2006 defense
budget. The company expects 2007 sales to range between $31
and $32 billion and earnings per diluted share to range between
$4.80 and $5.05. Net cash provided by operating activities is
expected to range between $2.5 and $2.8 billion for the whole
year.
"Although results were slightly impacted by a strike
in Pascagoula, our employees are now back at work building great
ships. With this quarter's sound operating performance and strong
cash from operations, we are well positioned to achieve our
2007 financial targets. Our performance continues to support
a balanced cash deployment strategy, which in the first quarter
included a 23 percent increase in our dividend and a $600 million
accelerated share repurchase, retiring approximately 8 million
shares," Sugar concluded.
Information & Services increased sales by 10%. Mission
Systems sales increase reflects revenue from the January 2007
acquisition of the Essex Corporation and higher volume for several
missile systems programs, which was partially offset by lower
volume in command, control and intelligence programs. Sales
at the Aerospace group declined 5% percent from Q1/06 due to
lower volume in Integrated Systems which declined 10% due to
lower volume for the E-2D Advanced Hawkeye, F-35 and EA-18G
programs, as these programs transition from development to production.
These declines were partially offset by better results with
F/A-18, Euro Hawk and B-2 logistic support. Space Technology
sales increased 3%, primarily due to higher volume for military
communications satellites and missile & space defense programs,
partially offset by lower volume for Civil Space programs. In
total, Integrated Systems operating margin rose 8% over the
prior year period, reflecting additional F/A-18 deliveries,
and improved performance on new production lot 6 aircraft and
B-2 programs.
In the first quarter 2007 ships sales rose 2% including revenues
related to aircraft carrier, LPD, Coast Guard Deepwater and
submarines. These programs were partially offset by lower volume
in the DDG 51 and LHD programs due to a now-concluded labor
strike at the company's Pascagoula, Mississippi shipyard, and
lower volume on the DDG 1000 program as it transitions from
development to detail design and production. Despite the strike,
operating margin increased 16% from the prior year period due
to higher volume and improved performance on the LPD and Virginia-class
Block II submarine programs.
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