Lockheed Martin (LMT) reported mixed earnings in the first quarter as its F-35 stealth combat program saw a decline in sales, while the defense giant on Tuesday boosted its year-round outlook. Lockheed stock relieved.
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Lockheed earnings
Earnings per share rose 8% to $ 6.56, gaining $ 6.34, while revenue rose 4% to $ 16.26 billion, missing $ 16.4 billion in views . Aviation sales increased 0.3% to $ 6.39 billion in higher-volume classified contracts and increased production on the F-16 program.
But F-35 sales declined by $ 65 million. Management attributed this, mainly because development was declining, while production was relatively low and sustainability increased modestly.
Missile and fire control sales increased 5% to $ 2.75 billion due to 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 rose 10% to $ 4.1 billion and Space Sales rose 3% to $ 3 billion.
Lockheed now sees annual gains of $ 26.40 to $ 26.70, compared to the previous guidance of $ 26.00 – $ 26.30 and higher than consensus views for $ 26.33, with revenue of $ 67.3 billion – $ 68.7 billion, compared to the previous extension of $ 67.1 billion – $ 68.5 billion and largely in line with consensus for $ 68.14 billion.
F-35 Cost
CEO James Taiclet told analysts on Tuesday that the Lockheed is improving the affordability of the F-35 and said the goal of reducing the cost per flight hour to $ 25,000 is achievable.
It will now decline from about $ 36,000 and come because leading lawmakers have put the program to the test for maintenance costs, which are estimated at $ 1.6 trillion over the life of the program.
Meanwhile, the pressure on the budget and a review of the air force of its future fighter jet have raised concerns that the acquisition of F-35 may decline.
“It’s an expensive machine and it’s expensive to maintain, mainly because of the shelter technology, which is more advanced than elsewhere,” Taiclet said.
Management added that it sees strong opportunities under President Biden for international defense cooperation and that it will benefit Lockheed.
Biden’s government recently informed Congress that it intends to approve the sale of F-35s and other weapons to the United Arab Emirates. The $ 23 billion arms package to the United Arab Emirates approved by the Trump administration a few hours before Biden took office in January.
But even though more allies are screaming to get the plane, the F-35 still faces a test delay. According to a Bloomberg report, the jet may not test a large part of its combat simulators until September 2022.
The Pentagon needs the simulation testing for the initial operational testing and evaluation of the F-35, which becomes clear the way in which full rate production begins.
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Lockheed Stock
Shares fell 1.1% and closed at 387.33 on the stock market today. Lockheed shares are trading at a buyout of 402.48 cups. Top F-35 subcontractors Northrop Grumman (NOC) increased by 0.15%, and the engine supplier Raytheon Technologies (RTX) lost 1.9%.
Boeing (BA) will work with Northrop next week and General dynamics (GD).
Missiles have been a major revenue stream for Lockheed in recent quarters. In January, the defense contractor said that sales of hypersonic weapons would amount to $ 1.5 billion this year and that the figure would double to $ 3 million by 2025. That is compared to an estimated $ 1 billion in 2020 and $ 600 million in 2019.
But Lockheed’s hypersonic rocket prototype could not be launched last week in what was supposed to be its first flight test with the Air Force.
In August 2018, Air Force Lockheed awarded a $ 480 million contract to design a hypersonic missile prototype for the ARRW program. The air force said it was using “rapid prototyping” to bring these weapons to a “capacity in 2021”.
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