McAleese & Associates: Northrop Posts $65B in Total Backlog for Q3 2019

Jeff Brody
Jim McAleese

A new McAleese & Associates report says Northrop Grumman (NYSE: NOC) saw its year-to-date backlog rise 22 percent to $65B in the third quarter of 2019 and posted $8.5B in Q3 sales, reflecting a 5 percent increase from the same period last year.

Jim McAleese, founder and principal of McAleese & Associates and a 2019 Wash100 winner, wrote the Falls Church, Va.-based defense contractor recorded a sector operating margin of 11.1 percent and a book-to-bill ratio of 1.2x during the quarter.

During the earnings call Thursday, Northrop CEO and fellow 2019 Wash100 awardee Kathy Warden “began piling up visible wins” on several programs, including the U.S. Air Force’s Ground Based Strategic Deterrent, B-21 execution, restricted space, missile defense and hypersonics, according to the report.

McAleese also cited the four new operating sectors of Northrop; the F-35 program; the potential impact of a continuing resolution on the company’s sales performance in 2020; plans to increase share repurchases between 2020 and 2021; and the state of the high-altitude long endurance unmanned aerial systems market.

Northrop recorded $10.1B in total net awards and earnings per share of $5.49 in the third quarter. Cash from operations totaled $1.1B, while the company’s free cash flow amounted to $882M.

The company’s aerospace systems saw its Q3 sales rise 5 percent to $3.4B, while the innovation systems segment posted a 12 percent growth in revenue, or $1.6B.

Northrop’s mission systems business posted $3B in quarterly sales, up 4 percent from the prior-year period. The technology services segment saw its Q3 sales jump 3 percent to approximately $1.07B.

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