Northrop Grumman's first-quarter net income rose 13 percent as the defense contractor spun off its shipbuilding business and adjusted its operations to accommodate shifting government priorities.
The company, based in Los Angeles, boosted its full-year outlook on Wednesday, saying that restructuring will help spur new growth in the face of Pentagon spending cuts.
Northrop's net income for the January-to-March quarter increased to $530 million, or $1.79 per share, from $469 million, or $1.53 per share in the same period a year earlier.
Revenue decreased 3 percent, with weaker results in all four of its business segments.
The quarter's results include income from a shipbuilding operation that Northrop spun off at the end of the quarter. Without the spinoff, earnings per share would have been $1.67.
Wall Street had been looking for earnings of $1.56 per share, according to a poll of analysts by FactSet.
Year-ago revenue figures were boosted by a joint venture in Nevada. The results no longer include that operation, which contributed $136 million.
Northrop received $1.43 billion from the shipbuilder sale. Part of that money will pay for an expanded share repurchase program. The company authorized its board to rebuy up to $4 billion of common stock, about one-fifth of the shares outstanding based on Tuesday's closing price.
Also Wednesday, Northrop increased its quarterly dividend by 6 percent, to 50 cents per share from 47 cents per share. The dividend is payable on June 11 to people holding shares on May 31. Northrop has been boosting its quarterly dividend for eight years.
Northrop spun off its beleaguered shipbuilding division into a separate company near the end of the first quarter. The company had struggled with a slowdown in Navy shipbuilding contracts and increased competition from rivals like General Dynamics Corp.
The partisan spending battles in Washington have defense contractors such as Northrop worried about a long-term revenue squeeze.
Defense spending is growing more slowly as the government tightens its belt and the U.S. military reduces its presence in Iraq and Afghanistan. The government is operating under a continuing budget resolution, meaning that spending was frozen at 2010 budget levels. That halted several defense programs, adding to the industry's woes.
In early March, Northrop blamed spending cutbacks for the elimination of 500 positions in its Electronics Systems division, based in Linthicum, Md.
Northrop raised its full-year guidance for earnings from continuing operations. It expects to $6.50 to $6.70 per share, up from earlier guidance of $6.40 to $6.60 per share.
Company shares rose $1.00, or 2 percent, to $63.49 in early trading Wednesday.