Buoyed by acquisitions, General Dynamics and Northrop Grumman report sales boosts

By Marjorie Censer  / July 25, 2018

General Dynamics and Northrop Grumman, with new acquisitions under their belts, today reported sales increases during their most recent quarters.

General Dynamics said sales during its most recent quarter hit $9.2 billion, up nearly 20 percent from the same three-month period a year earlier.

The contractor's quarterly profit reached $786 million, up about 5 percent from the prior year.

Sales were boosted by General Dynamics' acquisition of CSRA. General Dynamics Information Technology, which now includes CSRA, posted $2.4 billion in quarterly sales, up from $1.1 billion a year earlier.

Phebe Novakovic, General Dynamics' chief executive, said during a call with analysts the company's integration of CSRA is "going very, very well."

"They're right on target -- in fact, a little ahead of schedule," she said. "I suspect we will continue to see increased synergies over time."

Northrop Grumman, for its part, today reported sales in its most recent quarter hit $7.1 billion, up 10 percent from the same period a year earlier. The company's profit hit $689 million, up about 24 percent from the prior year.

Northrop's sales and profit were buoyed by its acquisition of Orbital ATK, which now is part of the company's new innovation systems business. Additionally, Northrop said it saw bolstered sales in its aerospace systems and mission systems businesses.

Kathy Warden, Northrop's chief operating officer, told analysts that the acquisition of Orbital ATK expands the company's portfolio in key areas.

For "hypersonics -- this expands Northrop Grumman's portfolio," she said. "We also look at classified space, and we have traditionally worked with large, complex systems. This expands our portfolio to smaller systems."

Northrop's technology services business reported a 10 percent drop in quarterly sales and a 24 percent decline in quarterly profit. The contractor attributed lower sales "to the completion of several programs," including a Missile Defense Agency program, and "lower volume on the KC-10 program as it nears completion."

The unit's profit drop reflected reduced sales and a notice of termination received for the Virginia Information Technologies Agency, Northrop said.

Wes Bush, the company's outgoing chief executive, said his planned departure is related to his "strongly held personal belief that healthy organizations use the dynamics of change to continuously improve themselves."

Northrop announced earlier this month that Warden would become CEO next year.

"Healthy change requires new leadership perspectives from time to time, and this includes new perspectives at the CEO level," Bush added.

Boeing reports earnings

Meanwhile, Boeing said in its earnings report today its defense, space and security business saw quarterly sales reach $5.6 billion, up about 9 percent from the same three-month period a year earlier.

The defense unit's profit hit $521 million, down about 15 percent from the prior year.

In a call with analysts today, Dennis Muilenburg, Boeing's chief executive, said the company is seeing significant opportunity in the Trump administration's focus on space.

"I'm very encouraged by what I see as the administration leaning forward on investing in space," he said, pointing to Space Force as well as the focus on space exploration. "It's good for business, it creates growth opportunities for us."