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Northrop Grumman's Unit Wins $210.5M Deal to Support LAIRCM

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Northrop Grumman Corp.’s (NOC - Free Report) business unit, Northrop Grumman Systems Corp., recently secured a modification contract to a previously awarded firm-fixed-price contract for Large Aircraft Infrared Counter Measures (LAIRCM). Work related to the deal is scheduled to be over by October 2020.

Details of the Deal

Valued at $210.5 million, the contract was awarded by Naval Air Systems Command, Patuxent River, MD. Notably, the funds for fiscal 2016, 2017 and 2018 aircraft procurement, fiscal 2018 working capital (Navy) and Foreign Military Sales (FMS) funds will be utilized to finance the task.

The project will be executed in Rolling Meadows, IL (34%), Goleta, CA (30%), Longmont, CO (11%), Colombia, MD (3%), various locations within the continental United States (19%) and various locations outside the continental United States (3%).

A Brief Note on LAIRCM

The LAIRCM system provides safety to onboard troops in a hostile situation. It is an active countermeasure that can automatically detect a missile launch. On identifying a missile, LAIRCM determines if it is a threat and activates a high-intensity, laser-based countermeasure system to track and destroy the missile on its own with no action required by the crew. The primary purpose of the LAIRCM program is to protect large aircraft from man-portable missiles.

Northrop Grumman’s Growth Prospects

Northrop Grumman has a strong presence in Air Force, Space & Cyber Security programs along with other strong players in the Aerospace – Defense industry such as Lockheed Martin Corporation (LMT - Free Report) , The Boeing Company (BA - Free Report) and Huntington Ingalls Industries, Inc. (HII - Free Report) .

The company’s product line is well positioned in high-priority categories such as defense electronics, unmanned aircraft and missile defense. Moreover, the fiscal 2019 defense budget includes $686.1 billion as funding for the Pentagon reflects 5% real growth over President Donald Trump’s initial budget for fiscal 2018. Such increased spending levels for defense are expected to lend a solid boost to Northrop Grumman.

Also, the strategic buyout of rocket and missile maker Orbital ATK for $9.2 billion will enable Northrop Grumman to enhance its product portfolio and capability in manufacturing technologically advanced combat platforms. The company will also benefit from Orbital ATK’S knowledge and expertise in satellites, spacecraft components and commercial space-launch systems. Moreover, the consolidation is expected to result in a strong combined cash flow generation that will allow Northrop Grumman to innovate more such notable weaponries for the United States.

Notably, Northrop Grumman consistently witnesses strong demand for its products on a global scale with programs like F-35, Triton and SABR radar, Global Hawk as well as a solid set of new programs in the international market. To this end, the Australian government, in June, announced its commitment to purchase Northrop Grumman’s Triton drones worth approximately $5.1 billion. Such contract wins should enable the company to improve its top line going forward.

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