Boeing tanker rival Northrop sees drop in 1st-quarter profits

LOS ANGELES — Northrop Grumman Corp. said Thursday first-quarter earnings fell 32 percent as the company was forced to take a charge due to rising costs and delays with an amphibious assault ship program it is building for the U.S. Navy.

The Los Angeles-based company also lowered its profit estimates for the full year, although it beat Wall Street estimates for the quarter, boosting its shares.

Northrop Grumman reported net income of $264 million, or 76 cents per share, in the quarter ending March 31. That compares to earnings of $387 million, or $1.10 per share, in the year-ago period.

Revenue for the quarter rose 6 percent to $7.72 billion from $7.34 billion.

Analysts expected the company to post earnings of 63 cents a share on sales of $7.7 billion, according to a Thompson Financial poll.

Its shares rose $2.73, or about 3.9 percent, to $72.21 in afternoon trading.

Results were hurt by a pretax charge of $326 million, or 61 cents per share, related to the problems with the LHD-8 amphibious assault ship program. The company had previously warned that wiring problems with the ship would delay delivery by six months.

The LHD-8 ship, the Makin Island, is being built in Pascagoula, Miss., and has been plagued by costly delays. The company took a $55 million charge in the second quarter of 2007 due to problems with the project.

Management said it expects the LHD-8 to be ready for delivery in the second quarter of 2009.

“Although the LHD-8 charge is deeply disappointing, the remainder of our first quarter performance was strong,” Chief Executive Ronald D. Sugar said during a conference call with Wall Street analysts. “Looking ahead, we are winning major competitions, generating report backlog, growing our sales, expanding our margins and executing our balanced cash deployment strategy.”

Northrop Grumman estimated its full-year profit will range between $4.90 and $5.15 per share, down from prior estimates. The company reiterated its 2008 sales would hit $33 billion.

Northrop said it received $12.1 billion in funded contracts during the quarter. That brought its total backlog of funded and unfunded orders to $68.1 billion as of the end of March.

Higher defense contract volume from established Northrop programs, such as the remotely piloted Global Hawk aircraft, and newer offerings, such as the KC-45 refueling tanker, helped drive sales growth during the quarter.

Excluding the company’s Gulf Coast shipyard operations, Northrop saw growth across all business segments.

Northrop’s information and services division generated sales of $3.1 billion, a 6 percent jump from the year-ago quarter.

Growth in the segment was driven by an increase in sales for intelligence, surveillance and reconnaissance programs, among others.

Sales in its aerospace unit rose 4 percent to $2.1 billion, while the electronics division saw sales increase 2 percent to $1.5 billion.

The aerospace segment’s sales were led by increased demand for programs such as the Global Hawk and the KC-45, offsetting weaker sales for other programs, including the F-35 aircraft and E-10A radar.

The company’s shipbuilding division generated sales of $1.3 billion, up 9 percent from a year earlier largely due to higher demand for surface combatant and fleet support programs.

The segment recorded a $218 million operating loss during the quarter compared to income of $79 million a year earlier.

Among the new contracts won by Northrop during the quarter was a $35 billion order from the U.S. Air Force for 179 of Northrop’s KC-45 tanker aircraft. Northrop beat out Boeing Co., which has filed a formal protest of the Air Force decision with the Government Accountability Office. A ruling on the matter is expected by June 19.

Talk to us

More in Herald Business Journal

Members of Gravitics' team and U.S. Rep. Rick Larsen stand in front of a mockup of a space module interior on Thursday, August 17, 2023 at Gravitics' Marysville facility. Left to right: Mark Tiner, government affairs representative; Jiral Shah, business development; U.S. Rep. Rick Larsen; Mike DeRosa, marketing; Scott Macklin, lead engineer. (Gravitics.)
Marysville startup prepares for space — the financial frontier

Gravitics is building space station module prototypes to one day house space travelers and researchers.

Orca Mobility designer Mike Lowell, left, and CEO Bill Messing at their office on Wednesday, Aug. 16, 2023 in Granite Falls, Washington. (Olivia Vanni / The Herald)
Could a Granite Falls startup’s three-wheeler revolutionize delivery?

Orca Mobility’s battery-powered, three-wheel truck is built on a motorcycle frame. Now, they aim to make it self-driving.

Catherine Robinweiler leads the class during a lab session at Edmonds College on April 29, 2021. (Kevin Clark / The Herald)
Grant aids apprenticeship program in Mukilteo and elsewhere

A $5.6 million U.S. Department of Labor grant will boost apprenticeships for special education teachers and nurses.

Peoples Bank is placing piggy banks with $30 around Washington starting Aug. 1.
(Peoples Bank)
Peoples Bank grant program seeks proposals from nonprofits

Peoples Bank offers up to $35,000 in Impact Grants aimed at helping communities. Applications due Sept. 15.

Workers build the first all-electric commuter plane, the Eviation Alice, at Eviation's plant on Wednesday, Sept. 8, 2021 in Arlington, Washington.  (Andy Bronson / The Herald)
Arlington’s Eviation selects Seattle firm to configure production plane

TLG Aerospace chosen to configure Eviation Aircraft’s all-electric commuter plane for mass production.

Jim Simpson leans on Blue Ray III, one of his designs, in his shop on Friday, August 25, 2023, in Clinton, Washington. (Ryan Berry / The Herald)
Whidbey Island master mechanic building dream car from “Speed Racer”

Jim Simpson, 68, of Clinton, is using his knowledge of sports cars to assemble his own Mach Five.

An Amazon worker transfers and organizes items at the new PAE2 Amazon Fulfillment Center on Thursday, Sept. 14, 2023, in Arlington, Washington. (Ryan Berry / The Herald)
Amazon cuts ribbon on colossal $355M fulfillment center in Arlington

At 2.8 million square feet, the facility is the largest of its kind in Washington. It can hold 40 million “units” of inventory.

A computer rendering of the North Creek Commerce Center industrial park in development at 18712 Bothell-Everett Highway. (Kidder Mathews)
Developer breaks ground on new Bothell industrial park

The North Creek Commerce Center on Bothell Everett Highway will provide warehouse and office space in three buildings.

Dan Bates / The Herald
Funko president, Brian Mariotti is excited about the growth that has led his company to need a 62,000 square foot facility in Lynnwood.
Photo Taken: 102312
Former Funko CEO resigns from the Everett company

Brian Mariotti resigned Sept. 1, six weeks after announcing he was taking a six-month sabbatical from the company.

Cash is used for a purchase at Molly Moon's Ice Cream in Edmonds, Washington on Wednesday, Aug. 30, 2023. (Annie Barker / The Herald)
Paper or plastic? Snohomish County may require businesses to take cash

County Council member Nate Nehring proposed an ordinance to ban cashless sales under $200. He hopes cities will follow suit.

A crowd begins to form before a large reception for the opening of Fisherman Jack’s at the Port of Everett on Wednesday, August 30, 2023, in Everett, Washington. (Ryan Berry / The Herald)
Seafood with a view: Fisherman Jack’s opens at Port of Everett

“The port is booming!” The new restaurant is the first to open on “restaurant row” at the port’s Waterfront Place.

Tanner Mock begins unwrapping new furniture that has been delivered on Thursday, Aug. 24, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
In Everett, new look, new name for mainstay Behar’s Furniture

Conlin’s Furniture, based in South Dakota, bought the huge store and celebrates with a grand opening this week.