Northrop Grumman reports 4 percent increase in second quarter earnings

Defense contractor Northrop Grumman Corp.  said Wednesday that its second quarter profit increased 4 percent despite a drop in sales.

The company reported $531 million, or $2.74 per diluted share, up from $511 million, or $2.37 per diluted share, compared to the second quarter of 2014.

The company boosted its earnings forecast for the year, from $9.40-$9.60 to $9.55-$9.70, partly because of a lower projected tax rate. The second quarter results include a $38 million net tax benefit for additional research credits.

Northrop Grumman said it assumes no disruption or federal government shutdown that would come from a debt-ceiling breach. The government is expected to boost the ceiling later this year. The company generates most of its revenue from the U.S. government.

The company noted that it purchased 6.8 million shares of its common stock for $1.1 billion in the second quarter. As of June 30, the company had repurchased 54.3 million shares toward its previously announced goal of retiring 60 million shares of its common stock by the end of the year, market conditions permitting.

“Our team continues to create value through strong operational performance and effective cash deployment. Going forward we will continue to focus on portfolio, performance and cash deployment as value creation drivers for our shareholders, customers and employees,” Wes Bush, chairman, CEO and president, said in a statement.

While overall sales dropped for the quarter from to $5.9 billion, compared to $6 billion in 2014, Northrop Grumman did see an uptick in its aerospace systems sector, largely from more demand for its unmanned programs. That segment posted $2.5 million in revenue while sales were down by 3 percent for the quarter in electronic systems and down by 5 percent for information systems.