Lockheed Martin Increases Profits Despite Drop In Sales

Lockheed Martin Increases Profits Despite Drop In Sales

Calvin Biesecker

Lockheed Martin [LMT] yesterday reported solid earnings growth despite lower sales due to strong profit gains at its Electronic and Space Systems segments and the company raised its earnings and sales guidance for the year.

Net income increased 4 percent to $727 million, $2.21 earnings per share (EPS), versus $700 million ($2.10 EPS) a year ago. The results trampled analysts’ expectations of $1.85 EPS. The company’s consolidated operating margins increased 70 basis points to 9.3 percent.

Electronic Systems and Space Systems were the only two segments boasting profit growth, with the gains driven by risk retirements on the Terminal High Altitude Area Defense program, ship and aviation programs, and higher earnings at the United Launch Alliance and United Space Alliance joint ventures.

Sales slid nearly 2 percent to $11.9 billion from $12.1 billion as declines at Aeronautics and Space Systems outweighed growth at Electronic Systems. The Information Systems and Global Solutions segment posted flat sales while its operating profit dipped slightly.

Lockheed Martin increased its financial guidance based on its performance so far this year. Sales are expected to be between $45.5 billion and $46.5 billion versus earlier guidance of between $45.5 billion and $46 billion. Earnings are expected to be between $8.20 and $8.40 versus $7.90 to $8.10 previously. Cash flow expectations were also raised.

Bob Stevens, Lockheed Martin’s chairman and CEO, said that the ongoing continuing resolution that is funding the federal government through next March is supporting the company’s programs at the previous year’s appropriated levels.

As for 2013, the company didn’t offer detailed guidance but said that trends suggest sales will decline at a low single digit rate, driven by a mid single digit decline at IS&GS.

Total backload at the end of September stood at $75.6 billion, down from $80.7 billion since the end of 2011.

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