Northrop Grumman Warns Of Potential Business Impacts From Pandemic

Northrop Grumman, whose unmanned systems integration center is pictured here, described the impact of the COVID-19 pandemic on its current operations as a "fluid situation" in a statement to Cal Biesecker, a reporter for Defense Daily, a sister publication to Avionics.

Northrop Grumman on Thursday said it can’t currently predict the impact on its business from the COVID-19 pandemic but warned investors of potential increased borrowing costs and of potential disruptions to its customers and operations.

In addition to higher capital costs and limits to capital, the company warned that “If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions in connection with the COVID-19 pandemic, our operations will likely be impacted. We may be unable to perform fully on our contracts and our costs may increase as a result of the COVID-19 outbreak. These cost increases may not be fully recoverable or adequately covered by insurance.”

Northrop Grumman in a filing with the Securities and Exchange Commission (SEC) does not indicate that there is currently a material impact to the company due to COVID-19. The filing is included in a prospectus the company filed with the SEC related to the issuance new bonds.

Northrop Grumman disclosed its warnings in a filing with the Securities and Exchange Commission. At least one company employee has tested positive for COVID-19 at a facility in Melbourne, Fla., according to news reports there. Northrop Grumman is headquartered in Northern Virginia.

A spokesman for Northrop Grumman on Thursday said that the situation is “fluid” and “changing daily,” but that the company is keeping close tabs on the situation.

“The health, safety and well-being of our employees is our highest priority,” the spokesman said. “We are frequently communicating the most current information and guidance to our employees, to ensure they are informed.”

Actions that Northrop Grumman is taking include halting travel, limiting non-essential visitors, increasing the use of tele-work to limiting the number of employees on sites, canceling large gatherings, and ensuring work environments remain clean and disinfected, he said.

Earlier in the week, Lockheed Martin [LMT] released a prepared statement in response to media queries about the impacts of COVID-19 on the company.

“National security never stops and Lockheed Martin plays an essential role in the national security industrial base, supporting the critical missions of our customers in the United States and abroad,” the company said. “We are working directly with and monitoring in real time the steps taken by federal, state and local officials to minimize the spread of Coronavirus (COVID-19). We continue to use best practices to mitigate risks and protect the health and well-being of our employees and partners, while ensuring we meet our commitments to national security.”

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