Northrop Grumman Beats Estimates, Boosts 2014 Earnings Outlook

(RTTNews) - Defense contractor Northrop Grumman Corp. (NOC) reported Wednesday a profit for the third quarter that declined five percent from last year, reflecting lower revenues amid declines in three of its four operating segments. Both earnings per share and quarterly revenues topped analysts' expectations. The company also raised its earnings guidance for the full-year 2014.

Los Angeles, California-based Northrop, the maker of aircraft carriers and fighter jets, reported net earnings of $473 million or $2.26 per share for the third quarter, compared to $497 million or $2.14 per share in the prior-year quarter.

Results for the latest quarter were reduced by $0.30 per share to reflect passage of the Highway and Transportation Funding Act of 2014 (HATFA), partially offset by settlements of certain legal claims, which increased net earnings by $0.23 per share.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $2.14 per share for the quarter. Analysts' estimates typically exclude one-time items.

The results for the third quarter were calculated on 209.2 million outstanding shares, compared to 232.6 million outstanding shares in the year-ago quarter.

On a pension-adjusted basis, earnings for the quarter were $2.32 per share, compared to last year's $1.97 per share.

Total sales for the quarter decreased 2 percent to $5.98 billion from $6.11 billion in the same quarter last year, but topped seventeen Wall Street analysts' consensus estimate of $5.89 billion. Sales grew only at one business segment, aerospace systems.

Aerospace systems sales for the quarter grew 2.4 percent to $2.54 billion, while electronics systems sales decreased 2.3 percent to $1.73 billion and Information systems sales declined 6.7 percent to $1.51 billion from last year.

Technical services sales slipped 3 percent to $691 million from a year ago, due to lower volume for the ICBM and Combined Tactical Training Range (CTTR) programs.

Operating margin for the quarter remained flat with last year at 12.9 percent.

Total backlog as of September 30, 2014, was $38.53 billion, and third-quarter new awards totaled $9.0 billion.

Looking ahead to fiscal 2014, Northrop raised its earnings guidance to a range of $9.40 to $9.50 per share from the prior forecast range of $9.15 to $9.35 per share. However, the company now projects sales of about $23.80 billion, compared to the prior guidance range between $23.50 billion and $23.80 billion.

Street is currently looking for full-year 2014 earnings of $9.35 per share, on annual revenues of $23.71 billion.

NOC closed Tuesday's regular trading session at $126.13, up $1.63 on a volume of 1.46 million shares. In the past 52-week period, the stock has been trading in a range of $100.63 to $134.24.