Northrop CFO: 'TS can grow in 2020'

May 16, 2019 at 1:45 PM

Northrop Grumman's chief financial officer said today he's optimistic about the prospects for the contractor's technology services business, which has posted sales declines in recent years.

Speaking at a Goldman Sachs conference, Ken Bedingfield said the unit was dogged by several key programs. As an example, he pointed to the company's loss in the recompetition of the KC-10 maintenance program, which was awarded to Vertex Aerospace, owned at the time by L3 Technologies.

"That was a tough program from a performance perspective," Bedingfield told attendees. "We got it performing well for the customer; it was just tough in terms of margin."

"We were unsuccessful in the recompete," he continued. "There was a pretty aggressive fixed-price bid that was successful, and we want to take on good business deals so that one wasn't for us."

But Bedingfield said the TS business is seeing growth, noting that its global logistics and modernization unit grew 4% to 5% in 2018.

"That's a solid business for us," he said.

Bedingfield said the technology services unit remains an area in which Northrop performs well.

"As we look forward, it's just about winning some new business and starting to get back to growth," he said. "I believe that TS can grow in 2020."

Earlier this year, Northrop announced the technology services business recorded an 8% decline in sales in 2018 compared to 2019.

Kathy Warden, Northrop's chief executive, said at the time the contractor would combine within TS its advanced defense services and system modernization and services units into one group, dubbed global services.

"That is intended to create a more competitive, integrated services portfolio that is focused on high-end services for IT as well as analytics and operations in the areas of cyber, health care and intelligence," she said. "We now have that segment positioned to begin growing."

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