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Northrop Posts Q1 Profit
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April 21, 1999: 1:22 p.m. ET
Results exceed analysts' forecasts, though lag last year's earnings
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LOS ANGELES (CNNfn) - Stronger sales within its information-technology unit helped Northrop Grumman Corp. post a profit of $1.50 a share in the first three months of 1999 -- well above the First Call consensus estimate of $1.33 a share -- even as sales of B-2 bombers and other weapons declined.
Profit from operations for the fifth-largest U.S. defense contractor rang in at $104 million in the first quarter of 1999, slightly below the $105 million, or $1.52-a-share profit it made a year earlier. Sales rose 4 percent to $2.1 billion from $2.01 billion.
A $180-million pre-tax charge relating to the company's canceled merger with Lockheed Martin (LMT) prompted the company to post a loss of $12 million, or 18 cents a share loss, in the first quarter of 1998.
Northrop (NOC) also took a first-quarter charge of $16 million, or 24 cents a share, for an alteration in the way it accounts for its start-up costs. That made net income $88 million, or $1.26 a share, in the first three months of the year.
Northrop has had some troubles of late keeping its earnings on an upward trajectory. This was the second consecutive quarter of declining profit for the Los Angeles-based firm, which supplies commercial-airplane parts, radar and air-defense systems.
What's more, Northrop has been struggling with engineering problems in key programs and declining sales overseas, particularly since the Pentagon blocked Lockheed Martin's attempt to buy it a year ago. Northrop's stock has lost more than a third of its value since the sale was rejected.
Northrop Chairman Ken Kresa said the first-quarter results were "consistent" with his expectations, particularly at the company's subsidiary Logicon Inc., which "continues to generate impressive sales growth, achieving a record level this quarter."
Net sales at Logicon totaled $359 million in the January-March period, a 53-percent increase over the $235-million in sales reported a year before.
As for the remainder of the year, Kresa said he expects more earnings to flow in from new contracts, particularly within Logicon. Logicon sales are expected to increase by about 15 percent this year, he said.
On the flip side, the firm's aerostructure division will continue to be hurt by slower sales, notably from Boeing Corp.'s decision to alter some of its commercial programs and the winding down of the federal government's B-2 Stealth Bomber program, Kresa said.
At the end of the first quarter, Northrop's business backlog -- how much in potential sales it's expecting from signed contracts -- was $10.7 million, down 7 percent from the $11.5 billion reported a year earlier.
Northrop shares rose 9/16 to 65-3/16 in mid-afternoon trading.
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