U.S. weapons maker Lockheed Martin, $LMT, has reported a near 14% rise in first-quarter sales
Lockheed Martin Corp. exceeded expectations in its first-quarter operating income, driven by increased deliveries of fighter jets and missile systems.
The defense company's consolidated operating profit remained steady at $2 billion compared to the previous year, surpassing the average analyst estimate of $1.91 billion. Earnings per share also outperformed, coming in at $6.33 compared to the consensus of $5.78.
"We feel we're set up pretty well to deliver the guidance not just in sales, but really all the metrics," Chief Financial Officer Jay Malave said in an interview with Bloomberg Television.
All four business units experienced sales growth in the quarter, contributing to an overall revenue increase of 14%. Bloomberg Intelligence suggested that US security companies might see single-digit sales growth from the aid package passed by the US House on Saturday, with the Senate set to vote on it. For Lockheed, the aid earmarked for Israel could lead to increased orders for F-35 fighter jets, according to BI.
Lockheed expects the munitions backfill from the aid package to support the growth projected in its forecasts, Chief Operating Officer Frank St. John said in the interview.
Lockheed reiterated its annual outlook, with sales expected to range between $68.5 billion and $70 billion, and diluted EPS forecasted at $25.65 to $26.35.
The company's stock rose up to 2.5% in pre-market trading.
While international demand for the F-35 is increasing, the Pentagon has paused Lockheed's deliveries of the aircraft configured with the latest software — known as TR-3 — pending completion of testing. This delay, with the government withholding about $7 million per jet, could pose a cash headwind of about $700 million to $840 million for Lockheed in 2024, BI said.
"We remain exceptionally focused on the execution of the F-35 program, working with our customers and suppliers to implement TR-3 capabilities," Chief Executive Officer Jim Taiclet said in the release.
The F-35 program is the world's costliest weapons program and is becoming more expensive, according to the Government Accountability Office. The high costs, along with the US military's reliance on contractors for the aircraft, could result in fewer flight hours or a reduction in the fleet.
Earnings in Lockheed's missiles and fire control unit decreased due to a reach-forward loss of $100 million associated with a classified program.
Demand for Lockheed's legacy missiles is expected to remain strong. Lockheed won a $17 billion contract over Northrop Grumman Corp. for the development of new anti-ballistic warheads meant to be deployed by the end of 2028.