Lockheed Martin Earnings Mixed As F-35 Sales Slip While Guidance Lifted

Lockheed Martin (LMT) reported mixed first-quarter earnings as its top program saw a decline in sales, while the defense giant raised its full-year outlook Tuesday. Lockheed stock eased.


Lockheed Earnings

Estimates: Analysts see Lockheed Martin earnings rising 4.3% to $6.34 per share with revenue climbing 5.2% to $16.4 billion.

Results: EPS of $6.56 on revenue of $16.26 billion. Aeronautics sales edged up 0.3% to $6.39 billion on higher volumes of classified contracts and for increased production on the F-16 program. But F-35 sales declined due to the inception-to-date effect of reducing the profit booking rate on a development contract and lower volume on development and production contracts.

Missiles and Fire Control sales rose 5% to $2.75 billion on increased sales of Patriot Advanced Capability-3, Joint Air-to-Surface Standoff Missile (JASSM) and Long Range Anti-Ship Missile (LRASM) missiles.

Rotary and Mission Systems climbed 10% to $4.1 billion and Space sales were up 3% to $3 billion.

Outlook: Full-year EPS of $26.40 – $26.70, up from prior guidance of $26.00 – $26.30 and above consensus views for $26.33, on revenue of $67.3 billion – $68.7 billion, up from prior guidance of $67.1 billion – $68.5 billion and largely in line with consensus for $68.14 billion.

Missiles have been a major revenue stream in recent quarters.  In January, the defense contractor said it sees hypersonic weapon sales hitting $1.5 billion this year and sees that figure doubling to $3 million by 2025. That’s up from an estimated $1 billion in 2020 and $600 million in 2019.

But Lockheed’s hypersonic missile prototype failed to launch last week in what was supposed to be its first flight test with the Air Force.

In August 2018, the Air Force awarded Lockheed a $480 million contract to design a hypersonic missile prototype for the ARRW program. The Air Force had said it was using “rapid prototyping” to bring these weapons to a “capability in 2021.”

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Lockheed Stock

Shares dipped 0.7% to 388.89 in premarket trading on the stock market today. Top F-35 subcontractor Northrop Grumman (NOC) and engine supplier Raytheon Technologies (RTX) weren’t active yet.

Boeing (BA) will report quarterly results next week along with Northrop and General Dynamics (GD).

As missiles continue to be a growth leader, the F-35 is currently the company’s biggest moneymaker.

The Biden administration reportedly notified Congress that it plans to approve the sale of Lockheed F-35 stealth fighters and other weapons to the United Arab Emirates. The 50 F-35s were part of a $23 billion arms package to the UAE that the Trump administration approved just hours before President Biden took office in January.

The deal started coming together after Israel and the UAE agreed to establish diplomatic ties in August.

But even as more allies clamor to get the jet, the F-35 faces yet another testing delay. The jet might not complete a major piece of its combat simulator testing until September 2022, according to a Bloomberg report.

The Pentagon needs the simulation testing for the F-35’s Initial Operational Test & Evaluation, which clears the way full-rate production to begin.

Follow Gillian Rich on Twitter for defense news and more.


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