I found 14 Big US Defense Contractor Corps with Pretax Earnings above $100 mil each in either the 3Q 2011 or in the 3Q 2010. Not all of the sales of these 14 Big US Defense Contractors are made to the US Government, but a substantial portion of them are.
These 14 Big US Defense Contractors registered a Total Pretax Earnings increase of 16% in annual 2010.
Then in the 1Q 2011, this earnings growth decelerated nicely to 5%.
So what happened in the 2Q 2011? Well, this earnings growth re-accelerated, precisely matching the 16% growth in annual 2010.
And then what happened in the most recent 3Q 2011? Well, this strong earnings growth continued, this time at 15%.
Below here are these 3Q 2011 Pretax Earnings (PTI), along with a comparison with the prior year’s quarter amounts, of these 14 Big US Defense Contractor Corps.
...........................................................................Increase
................................................PTI........PTI.......(Decrease)
.................................................3Q.........3Q..................
...............................................2011......2010....Amount....%
.................................................(millions of dollars)
United Technologies 2,064 1,767 297 17%
Boeing 1,642 1,244 398 32%
General Dynamics 952 928 24 3%
Lockheed Martin 949 829 120 14%
Honeywell 893 822 71 9%
Northrop Grumman 755 672 83 12%
Raytheon 675 726 (51) -7%
Precision Castparts 436 360 76 21%
L-3 Communications 352 371 (19) -5%
ITT(1) 321 293 28 10%
Goodrich 300 223 77 35%
Rockwell Collins 219 218 1 0%
Textron(2) 186 22 164 745%
Alliant Techsystems 124 114 10 9%
Total all 14 9,868 8,589 1,279 15%
(1) ITT PTI in both years excludes asbestos claims charge. Its 2011 PTI also excludes transformation costs related to its upcoming planned spin-off.
(2) Textron 2010 PTI excludes translation adjustment reclassified to earnings.
When you focus on the last 7 years of the Bush/Cheney Presidency, the Total Core Pretax Income of these above 14 Big US Defense Contractors grew from $10.8 bil in 2001 to $35.8 bil in 2008, or up an off-the-charts 230% in that 7 year period.
And we wonder how the US Deficit is so high now?
Clearly, there are wise steps we can take to reduce US Government spending to US Defense Contractors.
I think one initiative that could help here is to substantially kill the Cost Plus Contracts the US Government enters into with Big US Defense Contractor Corps. It is just not right for these companies to be making such windfall profits, and particularly to do it when they don't have downside risk, since their losses are substantially protected by Cost Plus Government Contracts.
The Deficit Reduction Super-Committee should focus like a laser on wisely reducing the US Government profligate spending to US Defense Contractor Corps.
There is no way these 14 Big US Defense Contractor Corps should be making the level of profits they are making, especially when the US Deficit is so huge.
