McAleese & Associates: Northrop Posts 16% Sales Growth Driven by Aerospace, Innovation Systems Segments

Jim McAleese

Consulting firm McAleese and Associates has released a report that provides an overview of the financial performance of Northrop Grumman (NYSE: NOC) during the fourth quarter and full year 2018.

Northrop saw its 2018 sales jump 16 percent to $30B driven by sales growth at its innovation systems business and aerospace systems segment.

Jim McAleese, founder and partner at McAleese & Associates and a 2019 Wash100 winner, wrote that the company’s aerospace systems sector recorded an 8 percent rise in 2018 sales attributed to the U.S. Air Force’s B-21 bomber program.

According to the report, Northrop CEO Kathy Warden expects B-21 growth to resume by 2022 or 2023 for low-rate initial production.

Kathy Warden

“Our business cycle, particularly with AS [aerospace systems sector]…tend to be beyond 3-5 years…When we win a large program, it takes time for us to ramp up to a normalized-state of revenue for development, and that tends to plateau a bit, before we get into the production phase, where there is another ramp-up process…[Y]ou are really talking about five-plus years,” Warden said Thursday during the company’s earnings call.

The defense contractor’s aerospace systems sector reported a 12 percent increase in Q4 profit driven by the B-21 critical design review that occurred during the quarter. The company also saw its 2018 sector operating profit increase 19 percent to $3.4B.

Warden plans to expand the missile defense workshare as a growth engine for its innovation systems and mission systems segments, the report noted.

She targets the innovation systems segment for “revenue-synergy” growth across four areas: space; missile defense and hypersonics offense; 2020 downselection for the U.S. Air Force’s $63B Ground Based Strategic Deterrent program; and counter-hypersonics.

Warden, a 2019 Wash100 recipient, also cited the consolidation of two businesses within the company’s technology services sector into a single entity – global services – focused on cybersecurity, health care, intelligence, data analytics and other high-end IT services.

Check Also

KBR

KBR Wins Potential $93M Navy Combat Integration System Support IDIQ

KBR’s (NYSE: KBR) government services business has won a potential five-year, $92.6M contract to engineer and produce datalink systems and associated platforms for the U.S. Navy’s combat operations.

DLA

DLA Awards Logistics Modernization Integration Support IDIQs to Advantaged Solutions, United Defense International

Advantaged Solutions and United Defense International have each received a potential five-year, $265M contract from the Defense Logistics Agency for logistics modernization integration support.