At least an analyst is still paying attention....r
Post# of 1352
Posted On: 04/24/2014 12:33:30 PM
At least an analyst is still paying attention....rehashed Cirque in it's 1q study on Northrop:
04.23.14 – As the U.S. defense sector remains pressured, Northrop Grumman IS&TS will pursue opportunities in healthcare and critical infrastructure in 2014
Sebastian Lagana, Analyst
@SLaganaTBR
Below is TBR’s commentary on Northrop Grumman IS&TS' 1Q14 earnings. Please feel free to use this content with TBR and analyst attributions. Contact Sebastian Lagana at 603.758.1857 or sebastian.lagana@tbri.com for additional commentary.
Northrop IS&TS exceeds both revenue and profitability guidance as spending reductions on existing contracts moderate
Northrop Grumman Information Systems & Technical Services (IS&TS) followed suit with industry trends in its 1Q14 earnings, with consolidated year-to-year revenue contraction of 4.9% beating a seasonally adjusted estimate of -6.2%. Revenue was impacted by decreased funding on the majority of IS programs, including $40 million contraction on in-theater programs, while TS suffered declining volume on legacy maintenance, modernization and upgrade (MM&U) programs, partially offset by increased demand for integrated logistics work. Equally encouraging was IS&TS' consolidated operating margin, which at 10.1% represents extremely profitable operations for a legacy defense business, exceeding those in its peer group, such as Lockheed Martin IS&GS and General Dynamics IS&T, by over 100 basis points.
Similarly to its peers, Northrop declined to increase revenue guidance for IS&TS despite exceeding expectations during the quarter, as persistent uncertainty related to ongoing program appropriations continues to mute positive market momentum.
Northrop Grumman IS&TS’ relationship with CA Technologies will facilitate further penetration of the healthcare vertical by enhancing its identity access management (IAM) solutions
Northrop Grumman IS&TS' healthcare business, which captured key state-level eligibility platform wins with Tennessee and Wyoming during the second half of 2013, remains a key component of the company’s push to diversify its revenue mix. In order to further augment its portfolio, IS&TS announced during January that the company will team with CA Technologies to capture demand for IAM solutions within the healthcare vertical.
By layering CA’s CloudMinder software-as-a-service solution on top of Northrop’s Multitenant Infrastructures & Secure Software Technology (MIS2T) cloud platform, Northrop has added a cost-conscious, standardized method of addressing security concerns in the healthcare space. We believe this is critical to the company further expanding its business, given that standardized IAM security was listed as a major risk to healthcare security by the National Strategy for Trusted Identities in Cyberspace (NSTIC) initiative.
Northrop’s past experience working with CA on identity-related issues played a major role in the formation of the current partnership, given the success the companies had in the creation of the Cross-Sector Digital Identity Initiative (CSDII) in 2011, which provides thought leadership, concepts and guiding principles to the NSTIC.
Critical infrastructure modernization, such as airport systems, offer U.S. public sector contractors an opportunity to expand their international operations
Federally-focused vendors are increasing their value proposition by appealing to demand for cost takeout solutions, through either the repurposing of existing capabilities for new applications or through the development of new solutions that tackle unique problems. To this end, IS has partnered with Cirque Energy Inc. to develop a Deployable Gasification Unit (DGU), which takes on-site waste produced by military and industrial operations and converts it to electricity and recoverable heat.
Northrop Grumman is also developing solutions to decrease the cost related to military training exercises, with IS collaborating with the Air Force Air Mobility Command to perform its first demonstration of the Mobility Air Forces Distributed Mission Operations test network, which enables geographically separate flight simulations to collaborate for air-to-air refueling training. By allowing C-17, KC-135 and Boom Operator Weapon System Trainer simulators to network and perform a refueling training mission, we believe Northrop will immediately drive savings through reduced logistical expenses and fewer high-cost live flights, while also laying the groundwork for a new training and simulation models for other branches of the U.S. military.
04.23.14 – As the U.S. defense sector remains pressured, Northrop Grumman IS&TS will pursue opportunities in healthcare and critical infrastructure in 2014
Sebastian Lagana, Analyst
@SLaganaTBR
Below is TBR’s commentary on Northrop Grumman IS&TS' 1Q14 earnings. Please feel free to use this content with TBR and analyst attributions. Contact Sebastian Lagana at 603.758.1857 or sebastian.lagana@tbri.com for additional commentary.
Northrop IS&TS exceeds both revenue and profitability guidance as spending reductions on existing contracts moderate
Northrop Grumman Information Systems & Technical Services (IS&TS) followed suit with industry trends in its 1Q14 earnings, with consolidated year-to-year revenue contraction of 4.9% beating a seasonally adjusted estimate of -6.2%. Revenue was impacted by decreased funding on the majority of IS programs, including $40 million contraction on in-theater programs, while TS suffered declining volume on legacy maintenance, modernization and upgrade (MM&U) programs, partially offset by increased demand for integrated logistics work. Equally encouraging was IS&TS' consolidated operating margin, which at 10.1% represents extremely profitable operations for a legacy defense business, exceeding those in its peer group, such as Lockheed Martin IS&GS and General Dynamics IS&T, by over 100 basis points.
Similarly to its peers, Northrop declined to increase revenue guidance for IS&TS despite exceeding expectations during the quarter, as persistent uncertainty related to ongoing program appropriations continues to mute positive market momentum.
Northrop Grumman IS&TS’ relationship with CA Technologies will facilitate further penetration of the healthcare vertical by enhancing its identity access management (IAM) solutions
Northrop Grumman IS&TS' healthcare business, which captured key state-level eligibility platform wins with Tennessee and Wyoming during the second half of 2013, remains a key component of the company’s push to diversify its revenue mix. In order to further augment its portfolio, IS&TS announced during January that the company will team with CA Technologies to capture demand for IAM solutions within the healthcare vertical.
By layering CA’s CloudMinder software-as-a-service solution on top of Northrop’s Multitenant Infrastructures & Secure Software Technology (MIS2T) cloud platform, Northrop has added a cost-conscious, standardized method of addressing security concerns in the healthcare space. We believe this is critical to the company further expanding its business, given that standardized IAM security was listed as a major risk to healthcare security by the National Strategy for Trusted Identities in Cyberspace (NSTIC) initiative.
Northrop’s past experience working with CA on identity-related issues played a major role in the formation of the current partnership, given the success the companies had in the creation of the Cross-Sector Digital Identity Initiative (CSDII) in 2011, which provides thought leadership, concepts and guiding principles to the NSTIC.
Critical infrastructure modernization, such as airport systems, offer U.S. public sector contractors an opportunity to expand their international operations
Federally-focused vendors are increasing their value proposition by appealing to demand for cost takeout solutions, through either the repurposing of existing capabilities for new applications or through the development of new solutions that tackle unique problems. To this end, IS has partnered with Cirque Energy Inc. to develop a Deployable Gasification Unit (DGU), which takes on-site waste produced by military and industrial operations and converts it to electricity and recoverable heat.
Northrop Grumman is also developing solutions to decrease the cost related to military training exercises, with IS collaborating with the Air Force Air Mobility Command to perform its first demonstration of the Mobility Air Forces Distributed Mission Operations test network, which enables geographically separate flight simulations to collaborate for air-to-air refueling training. By allowing C-17, KC-135 and Boom Operator Weapon System Trainer simulators to network and perform a refueling training mission, we believe Northrop will immediately drive savings through reduced logistical expenses and fewer high-cost live flights, while also laying the groundwork for a new training and simulation models for other branches of the U.S. military.
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