Lockheed misses Street 3Q forecasts
Associated Press Associated PressOctober 24, 20172 Comments
BETHESDA, Md. (AP) _ Lockheed Martin Corp. (LMT) on Tuesday reported third-quarter profit of $939 million.
On a per-share basis, the Bethesda, Maryland-based company said it had profit of $3.24.
The results fell short of Wall Street expectations. The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of $3.25 per share.
The aerospace and defense company posted revenue of $12.17 billion in the period, also missing Street forecasts. Five analysts surveyed by Zacks expected $12.83 billion.
Lockheed expects full-year earnings to be $12.85 to $13.15 per share, with revenue in the range of $50 billion to $51.2 billion.
Lockheed did receive some good news in the quarter for the F-35 program, with much of the work being performed at the company’s Fort Worth location.
Aeronautics’ net sales in the third quarter of 2017 increased $583 million, or 14 percent, compared to the same period in 2016. The increase was primarily attributable to higher net sales of approximately $540 million for the F-35 program due to increased volume on production and sustainment.
Aeronautics’ operating profit in the third quarter of 2017 increased $80 million, or 18 percent, compared to the same period in 2016. Operating profit increased approximately $65 million for the F-35 program due to increased volume on aircraft production and sustainment activities and higher risk retirements and about $55 million for the F-16 program due to higher risk retirements. These increases were partially offset by a decrease of approximately $25 million for the C-5 program due to lower risk retirements and decreased deliveries (one aircraft delivered in 2017 compared to two in 2016). Adjustments not related to volume, including net profit booking rate adjustments, were about $45 million higher in the third quarter of 2017 compared to the same period in 2016.
“In July, I discussed the F-35 LRIP 11 award we received for U.S. jets just after the close of the second quarter valued at approximately $5.6 billion, and the expectation that we would add an additional order to that lot for international aircraft,” said Lockheed Martin Chairman, President and CEO Marillyn Hewson during the earnings call. “We did indeed receive an undefinitized contract for nearly $3.7 billion, bringing our total third quarter 2017 LRIP 11 orders to over $9 billion with 141 aircraft to be delivered in this batch.”
The earnings call transcript is courtesy SeekingAlpha.
Lockheed’s Missiles and Fire Control business, which is based in Grand Prairie, also saw some good news.
That division’s net sales in the third quarter of 2017 increased $56 million, or 3 percent, compared to the same period in 2016. The increase was primarily attributable to higher net sales of approximately $45 million for tactical missile programs (Joint Air-to-Surface Standoff Missile (JASSM)) due to product configuration mix, according to the company’s news release.
MFC’s operating profit in the third quarter of 2017 decreased $19 million, or 7 percent, compared to the same period in 2016. Operating profit decreased approximately $30 million for tactical missile programs (primarily Precision Fires, Joint Air-to-Ground Missile (JAGM), and Hellfire) due to lower risk retirements and the establishment of a reserve on a program. Adjustments not related to volume, including net profit booking rate adjustments, were about $70 million lower in the third quarter of 2017 compared to the same period in 2016.
“Moving to our Missiles and Fire Control business area, since the announcements in May by President Trump and King Salman of the Kingdom of Saudi Arabia and subsequent to the close of our third quarter, the State Department approved the sale of $15 billion worth of THAAD missile (07:03) completion of the same Congressional approval process as our F-16 notifications,” said Hewson during the earnings call. “We believe this is a strong indication of our portfolio’s broad demand and long-term growth potential. We look forward to working with our U.S. and Saudi customers to finalize this opportunity and to deliver this important capability to the Kingdom of Saudi Arabia.”
The Missiles and Fire Control division also saw a new business opportunity down the road when Lockheed was chosen to participate in a Long Range Stand Off or LRSO missile program.
“LRSO will be the next generation cruise missile for the air-launched portion of the nuclear triad. This $900 million Technical [Maturation] and Risk Reduction contract will allow us to develop and refine advanced technologies in support of the final Engineering, Manufacturing and Development competition which will take place in about three years,” said Hewson.
Lockheed shares have climbed 28 percent since the beginning of the year, while the Standard & Poor’s 500 index has risen 15 percent. The stock has increased 39 percent in the last 12 months.
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This story was 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