Northrop won't compete for 'very low cost and not survivable' drone contracts

Northrop Grumman isn't looking to compete for non-survivable drone programs and will focus on drones for high-end threats, CEO Kathy Warden told investors today during the company's first-quarter earnings call.

“We are not looking to compete in a more commoditized part of the market at very low cost and not survivable systems,” Warden said. “That’s just not our business model, and we know that.”

The call comes the day after the Air Force passed up Northrop for the first increment of the Collaborative Combat Aircraft, instead choosing Anduril and General Atomics to make prototypes of the autonomous teaming drones. Boeing and Lockheed Martin were also cut.

The comments also come as the Defense Department moves forward with its Replicator program to field thousands of attritable, autonomous drones in the next year and a half.

Northrop continues to see opportunities to expand its autonomous business globally, Warden said, particularly with the MQ-4C Triton.

“We will remain disciplined in where we invest and what pieces of that market that we pursue,” she said, “but we think that what we provide is still highly relevant.”

During the call, Chief Financial Officer Dave Keffer also noted a slower-than-anticipated growth in the company’s space business with the cancellation of one contract and the loss of another.

The Air Force canceled a classified space program due to budget “concerns and prioritization,” Warden said. The requirement for the capability in the program still exists, she said, and the company will “see how that plays out over time.”

The Missile Defense Agency also picked Lockheed Martin over Northrop Grumman to build the Next Generation Interceptor -- a decision that was made a year early due to budget constraints imposed by Congress as well.

Northrop will offset some of the changes in the financial outlook with LGM-35A Sentinel and growth in the Space Development Agency portfolio, Keffer said.