Northrop Grumman Corporation (NYSE:NOC) Q2 2019 Earnings Conference Call Transcript

Jul 24, 2019 • 12:00 pm ET

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Northrop Grumman Corporation (NYSE:NOC) Q2 2019 Earnings Conference Call Transcript

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Presentation
Executive
Kathy J. Warden

approximately $13 billion and total backlog has increased 28% since year-end. In the second quarter, we booked $3.6 billion for the E-2D. Approximately $3.3 billion was booked at AS for the US Navy's next 24 Advanced Hawkeyes and associated deliverables, with the balance awarded at Mission Systems.

In addition to US Navy Aircraft, the multi-year includes an option for the nine additional E-2Ds for Japan. In the second quarter, we delivered the first four E-2Ds currently under contract for Japan. And we anticipate being under contract for the additional nine by the end of this year.

On the F-35 program, we booked awards of over $4 billion in the quarter across our four sectors. At Aerospace Systems, we finalized to $4.9 billion agreement for production lots 12 through 14 center fuselage units, and booked an award of approximately $3 billion, net of previous incremental funding.

Mission Systems added $1 billion of award for additional F-35 radar CNI and DAS production. And IS and TS together, were awarded approximately $100 million for their scope on the program.

Moving to Innovation Systems, year-to-date net awards totaled approximately $3 billion. In addition to our prime role of supporting US government hypersonic weapon systems development efforts, we are also supporting Lockheed Martin and Raytheon program.

In the second quarter, Lockheed Martin awarded us $265 million for the Intermediate Range Conventional Prompt Strike program and IS working with Raytheon on the Hypersonic Air-breathing Weapon Concept or HAWC program. Shortly after the end of the quarter, Space Norway awarded IS a $250 million contract for its Arctic Satellite Broadband Mission to provide critical ground infrastructure and to design, manufacture and integrate two satellites. This activity increases utilization of our HAWC [Phonetic] production line enhancing affordability and production efficiency across our customer base. In addition, Aerospace Systems is developing payloads for the Space Norway satellite, which will be hosted on the [Indecipherable]. This is another example of revenue synergy in the space domain, and it highlights our industry-leading end-to-end capability.

Now moving to Mission Systems. We signed a $1 billion contract to begin full-rate production on our G/ATOR program after achieving initial operating capability in the first quarter. G/ATOR is our first ground-based gallium nitride or GaN radar to be operationally fielded. It combines five legacy systems into a single solution, improving mission performance and reducing customer costs. G/ATOR provides real-time 360 degree situational awareness against a broad array of threats and we see the system, having strong opportunity for international sales. Mission Systems is also supplying the upgraded integrated avionics suite for the Black Hawk program, which entered LRIP in April. An initial 25 kits were ordered under this LRIP and the Army plans to upgrade 760 Black Hawks with this avionic suite. And lastly, the Army awarded us an OTA for agile software development of their next incremental build with the IBCS capability. This competitive win signifies our customers' confidence in our ability and commitment to accelerate delivery of critical new war fighting capability.

Mission