Earnings report buoys Northrop
Northrop Grumman Corp. shares surged 4% on Thursday as first-quarter sales rose modestly to $7.7 billion, excluding a one-time charge, and operating earnings improved across all of its businesses.
The nation’s third-largest defense contractor said its profit fell 32%, hurt by a large one-time charge it took to cover the cost of construction delays with a Navy ship.
Chief Executive Ronald D. Sugar said in a conference call with analysts that though the charge to resolve problems with the ship was disappointing, the “remainder of the company is clicking on all cylinders.”
Century City-based Northrop, better known for building the B-2 stealth bomber, is also the world’s largest military shipbuilder, with sprawling facilities in Virginia, Mississippi and Louisiana. In Southern California, Northrop has about 27,000 workers, making it one of the region’s largest employers.
Northrop took a first-quarter pretax charge of $326 million, which cut its net income to $264 million, or 76 cents a share, down from $387 million, or $1.10, a year earlier. The charge, announced last week, was attributed to the costs of redoing the wiring in the Makin Island, an amphibious assault ship built in Pascagoula, Miss., that was preparing for sea trials.
Excluding the charge, the quarter’s 6% sales increase was better than expected and drove Northrop shares up $3.07, or 4.2%, to $72.55 a share.
Investors were emboldened by Northrop’s prospects, which include a $1.16-billion deal it won this week to supply Global Hawk unmanned surveillance planes to the Navy. Northrop beat Lockheed Martin Corp. and Boeing Co. to win the contract, which has the potential to grow to more than $3 billion.
The company also said it had been awarded $2.6 billion in contracts for classified programs in the first quarter, up from $688 a year earlier.
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