Lockheed Wins $27.1M U.S. Army Deal

Lockheed Martin Corporation (LMT - Analyst Report) has been awarded a contract worth $27.1 million by the U.S. Army to ensure greater crew safety and to modernize the fleet of Multiple Launch Rocket System (“MLRS”) M270A1 mobile rocket launchers. The contract constitutes the first phase of a three-year development program.

Per the agreement, Lockheed will test, assemble and upgrade seven prototype vehicles. In the first phase, the company will replace the launcher’s cab and the fire control panel. As a result, the launcher cab’s inner volume will expand by 40%. The addition of energy-absorbing seats will offer added protection from mine blasts and improvised explosive devices.

The shift to High Mobility Artillery Rocket System (“HIMARS”) launcher will improve survivability as a result of sufficient armoring in the new cab. These upgrades will ensure that the M270-series launcher remains effective and provides consistent services while protecting crews from threats.

MLRS M270A1 is a movable, automatic system used to fire surface-to-surface rockets and missiles from the M270A1 platform. The three-man crew onboard the launcher is able to fire up to 12 MLRS rockets or 2 Army Tactical Missile System (“ATACMS”) missiles from the inside of the cab. Lockheed Martin is the key contractor for M270A1 research and development along with its two partners BAE Systems Land and Armaments LP.

HIMARS has been in service since 2005. It is a new addition to the MLRS launcher group. HIMARS carries a single six-pack of rockets or one ATACMS missile on the army's 5-ton trucks and can launch all MLRS family of weapons. The HIMARS systems are interchangeable with the existing MLRS M270A1 launcher.

Earlier in September 2011, Lockheed Martin delivered the 400th HIMARS launcher to the U.S. Army. This launcher is in high demand due to its combat proven technique, which provides the armed forces with a reliable and mobile platform to launch rockets and missiles.

We view Lockheed Martin as a well-positioned organization with its successful delivery of information technology management services, infrastructure and applications to the U.S. Army and several other international defense establishments.

As the world’s largest standalone defense contractor, Lockheed Martin has a strong contract pipeline. Lockheed Martin ended the first quarter of 2012 with $76.6 billion of backlog. Of this Aeronautics segment orders amounted to $28.2 billion while Electronic Systems segment backlog was $24.3 billion.

The Space Systems segment orders were worth $15.4 billion and Information Systems & Global Solutions backlog amounted to $8.7 billion. On this basis, we expect Lockheed Martin to report a stable performance in the forthcoming quarters.

Lockheed Martin Corporation retains a Zacks #3 Rank, which translates into a short-term Hold rating. The company competes with Northrop Grumman Corporation (NOC - Analyst Report).

Bethesda, Maryland-based Lockheed Martin Corporation is a global security and aerospace company that is principally engaged in the research, design, development, manufacture, integration and maintenance of advanced technology systems, products and services.