Lockheed Martin stock falls as it reports 3Q revenue

F-35 fighter jet (courtesy Lockheed)

Lockheed Martin Corp. (LMT) was down $44.42 to $331.91 after the aerospace and defense company’s third-quarter revenue fell short of Wall Street forecasts.

Lockheed Martin on Oct. 26 reported third-quarter net income of $614 million.

On a per-share basis, the Bethesda, Maryland-based company said it had profit of $2.21. Earnings, adjusted for non-recurring costs, came to $6.66 per share.

The aerospace and defense company posted revenue of $16.03 billion in the period, which fell short of Street forecasts. Four analysts surveyed by Zacks expected $17.15 billion.

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The Bethesda, Maryland-based aerospace and defense giant also said it had updated its 2021 guidance and forecast a slight reduction in 2022 revenue.

“During the third quarter, the men and women of Lockheed Martin continued to deliver essential products and capabilities for domestic and allied national defense, and for pioneering civil space endeavors,” said Lockheed Martin Chairman, President and CEO James Taiclet. “At the same time, we continued to advance the state of the art and innovation across key technologies, including Future Vertical Lift, Integrated Air and Missile Defense, hypersonic weapon systems, next generation satellites, and many others.

“In addition, we have recently undertaken a reassessment of our five-year business plan given recent external and programmatic events. Our conclusions, which are reflected in our updated 2021 guidance and subsequent trend information, reflect continuing strong cash flow generation, but a slight reduction in revenue in 2022 and roughly flat to low-single-digit growth rates in both revenue and segment operating profit over the next few years, with increasing growth opportunities in the years that follow.

“Consequently, we are adjusting our capital allocation strategy with two major objectives. First, to expand further our robust reinvestment in the company to serve our customers’ evolving needs through capital projects and independent research and development for mid- to long-term enhanced growth performance. Simultaneously, we plan to reward shareholders with continued dividend growth and meaningful increases to the scale and rate of our share repurchase program. Over the short-, mid- and long-term, we will strive to maximize cash flow per share dynamically, based on revenue growth opportunities, inorganic investments, and share repurchases to take full advantage of our significant cash flow generation and strong balance sheet.”

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The company said it expects 2022 net sales to decline from expected 2021 levels to approximately $66 billion and 2022 total business segment operating margin to be approximately 11.0%. Cash from operations in 2022 is expected to be greater than or equal to $8.4 billion, which excludes a potential decrease in 2022 cash from operations of up to $2 billion if the provisions in the Tax Cuts and Jobs Act of 2017 that eliminate the option to immediately deduct research and development expenditures in the period incurred and requires companies to amortize such expenditures over five years is not modified or repealed by Congress before it takes effect on Jan. 1, 2022. Although the company continues to have ongoing discussions with members of Congress, both on its own and with other industries through coalitions, it has no assurance that these provisions will be modified or repealed.

The preliminary outlook for 2022 also assumes continued support and funding of our programs, a statutory tax rate of 21%, known impacts of COVID-19, and the continued acceleration of supplier payments at current levels, according to a Lockheed news release.

Lockheed Martin’s Aeronautics segment, based in Fort Worth, saw net sales during the third quarter of 2021 decrease $112 million, or 2%, compared to the same period in 2020. The decrease was primarily attributable to lower net sales of approximately $220 million for the F-35 program due to lower volume on development contracts and lower volume and risk retirements on production contracts. This decrease was partially offset by an increase in sales of about $35 million for the F-16 program due to higher production volume that was partially offset by lower sustainment volume; and approximately $30 million for classified development contracts due to higher risk retirements.

This story was partially generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on LMT at https://www.zacks.com/ap/LMT 

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Associated Press and FWBP contributed to this report.