Northrop Grumman Corporation (NYSE:NOC) Q2 2019 Earnings Conference Call - Final Transcript
Jul 24, 2019 • 12:00 pm ET
[Operator Instructions] Your first question is from the line of Myles Walton with UBS.
Thanks, good morning.
Kathy J. Warden
I was -- I was wondering on the bookings front, obviously, extremely strong in the first half and particularly here in the second quarter. But I think in the 10-Q you filed, it also shows a slower burn of that backlog, about 40% over the next 12 months as opposed to the 50% over the next 12 months for the last several quarters not a couple of years. Can you talk about how indicative that growth in backlog is about your acceleration of growth given that kind of reduced burn rate, if that's accurate?
Kenneth L. Bedingfield
Yeah, let me start with that, Myles. I would just say that we are really happy to see the awards in the backlog that we've been able to get in the first half of the year, and as Kathy mentioned, we do expect to see continued strong awards in the second half of the year. I would just point out that a number of the awards we've been booking like the B-21, E-2D, which is a five-year multi-year contract, F-35, lots 12 to 14, many of these programs are going to support multiple years of revenue. And so, given in particular, the awards booked in the first part of the year, first half of this year, the biggest ones being E-2D, as well as F-35 and then some restricted space activity, we expect those awards to result in sales for a multi-year period and give us really good visibility into strong sales growth for a number of years to come.
And so, given those -- the impact of those large, kind of multi-year awards, we do see that those will result in our backlog turning into sales and about 40% in the next 12 months versus our previous average of about 50%. But it does not give us any pause as to any guidance we have given with respect to '19 sales or with any indication we have given you about where we think we can be on 2020 sales. And I'll just remind you, we talked about a mid-single digit range on 2020, but given our awards activity and the opportunities we see in front of us, we think we've got opportunity to be in the higher end of that range for 2020.
So we think it's -- it's really a good new story and supports, again, this -- while we've been talking about the level of visibility we have into some long range sales growth for this business.
That's great color. Thank you, Ken.
Your next question is from the line of Ron Epstein with Bank of America.
Hey, good morning guys. Good afternoon, actually. Quick question. It's my understanding that the RFP came out for -- through the next phase of GBSD. Can you share any thoughts on what you guys are thinking about it and how you feel about it?
Kathy J. Warden