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About Northrop Grumman Innovation Systems, Inc.

Northrop Grumman's major military systems include manned and autonomous aircraft such as the Global Hawk drone, a next-generation B-21 Raider bomber, and fuselage sections for the F-35 Lightening. Other products and services include various command, control, communications, computer, intelligence, surveillance, and reconnaissance (C4ISR) systems that support the military from the ground, the air, and space. The company also offers software and services in support of national security for the US and its allies. The 2018 acquisition of Orbital ATK added space vehicles, satellites, ammunition, and missile propulsion systems. The US government accounts for more than 80% of Northrop Grumman's sales. 

Operations

Northrop Grumman operates through four segments.

Aerospace Systems (about 40% of sales) makes manned and unmanned military aircraft and laser weapon systems. The division also manufactures and integrates spacecraft systems and communications payloads in support of space-based C4ISR and science missions. 

The company's Mission Systems segment (about 35% of sales) provides integration of net-enabled battle management systems and air and missile defense integration with land, air, and space systems. The division also offers shipboard missile and encapsulated payload launch systems, unmanned maritime vehicles, and under-sea sensors. Cyber mission capabilities include national security, missile warning and defense, and satellite communications. Additional offerings include radars and electronic warfare systems for ground-based and aircraft platforms.

Northrop Grumman's Technology Systems division (about 15% of sales) offers software and systems sustainment, modernization, training, and logistics support for the US and its allies as well as to federal and civilian customers. 

The Innovation Systems segment (10% of revenue) manufactures small-, medium-, and large-caliber ammunition, advanced guns, and missile propulsion systems. The unit also makes small- and medium-class space launch vehicles for placing satellites into earth orbit, and interceptor and target vehicles for missile defense systems. Other operations include production of satellites for communications and scientific research and spacecraft for delivering humans and cargo to the International Space Station.

 

Geographic Reach

Northrop Grumman owns or leases about 53 million sq. ft. of floor space at nearly 550 separate locations, primarily in the US. In addition to the US, the company has operations in Germany, Italy, the UK, Australia, and France.

Its segments are headquartered in Redondo Beach, California (Aerospace Systems); Linthicum, Maryland (Mission Systems); Herndon, Virginia (Technology Services); and Dulles, Virginia (Innovation Systems).

Sales and Marketing

The company serves domestic and international defense, civil, and commercial customers. The US government accounts for almost 85% of its revenues. Contracts with the US government are typically on a cost-type or fixed-price basis. Cost-type projects, which provide reimbursement for the contractor's incurred costs plus a fee, typically involve less risk. Fixed-price contracts are for a fixed amount regardless of potential cost overruns.

Financial Performance

Except for a slight dip in 2015, Northrop Grumman's revenue has seen steady growth the last five years, rising 25% between 2014 and 2018. Growth during this period was chiefly driven by higher sales in the company's Aerospace Systems and Mission Systems segments.

Sales in 2018 increased 16% to $30.1 billion compared to $26 billion in 2017. Growth in 2018 was fueled by the addition of the Innovations Systems segment (the acquisition of Orbital ATK) which added $3.3 billion in sales. Revenue for the Aerospace Systems and Mission Systems segments increased 8% and 2%, respectively, which partially offset an 8% decline in sales for the Technology Services division. 

Net income increased nearly 13% to $3.2 billion in 2018 compared to 2017, primarily due to higher sales and operating profit in the company's Aerospace Systems and Mission Systems segments as well as the additional sales from the new Innovations Systems division.

Cash at the end of 2018 was $1.6 billion, a decrease of $9.6 billion from the prior year. Cash from operations contributed $3.8 billion to the coffers, while investing activities used $8.9 billion, mainly for the Orbital ATK acquisition. Financing activities used $4.6 billion, primarily in the form of payment of long-term debt and stock repurchases.  

 

Strategy

The 2018 purchase of Orbital ATK was a transformational move for Northrop Grumman and was potentially one of its largest acquisitions to date. The deal expanded Northrop Grumman's offerings to include ammunition, gun systems, and missile propulsion systems, not to mention satellites and space launch vehicles for traveling to and from the International Space Station.

To fuel organic growth, Northrop Grumman is focused on the future frontiers of warfighting, space exploration, and information technologies. In 2019 the company was awarded a US Army contract to prototype a high energy laser weapon system mounted on Stryker combat vehicles for protection of frontline combat units. Northrop Grumman is also developing the next-generation bomber plane, the B-21 Raider. The B-21 is expected eventually to replace the B-2 stealth bomber.

The company is also focused on growing its international sales, which it accomplished in 2018 by increasing non-US sales to 15% of total revenue. Northrop Grumman's international operations often take the form of joint ventures with foreign companies. An example is the company's joint venture that provides equipment fielding, training, maintenance, logistics and other support to Saudi Arabia's Ministry of the National Guard.

 

Mergers and Acquisitions

In 2018, Northrop Grumman bought Orbital ATK, a maker of rockets, satellites, and missile-defense systems, for about $7.8 billion and assumption of about $1.4 billion in debt. The deal, the biggest in the defense sector in several years, extends Northrop Grumman's capabilities into launchers, satellites, and other aerospace areas. Orbital has contracts with the US Army and NASA and is one of two companies contracted to fly cargo to the International Space Station. Northrop Grumman made Orbital ATK its fourth business segment -- Innovation Systems.

Northrop Grumman Innovation Systems, Inc.

45101 WARP DR
Dulles, VA 20166-6874
Phone: 1 (703) 406-5000

Stats

Employer Type: Privately Owned
Chairman: Gen Gen Ronald R Fogleman
Coo: Blake Larson
Director Of Business Systems: Troy Thomas
Employees (This Location): 216
Employees (All Locations): 15,000

Major Office Locations

Dulles, VA

Other Locations

Huntsville, AL
Gilbert, AZ
Mesa, AZ
Commerce, CA
Corona, CA
Goleta, CA
Northridge, CA
San Diego, CA
Woodland Hills, CA
Kennedy Space Center, FL
North Palm Beach, FL
West Burlington, IA
Lewiston, ID
Hopkinton, MA
Baltimore, MD
Elkton, MD
Greenbelt, MD
Shelby Township, MI
Anoka, MN
Elk River, MN
Minnetonka, MN
Plymouth, MN
Lees Summit, MO
Beavercreek, OH
Fort Worth, TX
Brigham City, UT
Clearfield, UT
Magna, UT
Arlington, VA
Radford, VA