Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) , reported second-quarter 2016 earnings of $3.32 per share, surpassing the Zacks Consensus Estimate of $2.92 by 13.7%. Earnings also increased 12.9% from the year-ago level owing to higher deliveries of F-35 fighter jets as well as higher sales from its Sikorsky helicopter unit.
Operational Highlights
In the reported quarter, total revenues came in at $12.91 billion, beating the Zacks Consensus Estimate of $12.53 billion by 3%.
The company’s revenues also increased 10.9% from $11.64 billion a year ago. All segments, except Space Systems and Information Systems & Global Solutions, registered year-over-year sales growth.
Backlog
Lockheed Martin ended the second quarter (on Jun 26, 2016) with $96.4 billion in backlog, down 3.2% from $99.6 billion at 2015 end. Of this, a $28.8 billion share went to the Aeronautics segment while Mission Systems and Training accounted for $29.5 billion. The rest comprised $18.5 billion for Space Systems, $15.3 billion for Missiles and Fire Control, and $4.3 billion for Information Systems & Global Solutions.
Quarterly Segmental Performance
Aeronautics: Quarterly sales increased 6% year over year to $4.4 billion, mainly on F-35 production contracts and sustainment activities during the quarter.
Operating profit also advanced 8% year over year to $478 million and operating margin increased 20 basis points (bps) to 10.9%.
Information Systems & Global Solutions: Quarterly sales decreased 5% to approximately $1.33 billion. The decline reflects the impact of completion of certain programs and heightened competition.
However, operating profit came in at $151 million, up 41% year over year and operating margin expanded 370 bps to 11.3%.
Missiles and Fire Control: Quarterly sales increased 2% year over year to $1.7 billion. The increase reflects higher revenues related to SNIPER and Special Operations Forces Contractor Logistics Support Services as well as from air and missile defense programs.
However, operating profit decreased 14% year over year to $253 million and operating margin contracted 270 bps to 15.1%.
Mission Systems and Training: Quarterly sales of $3.3 billion increased 53% from the prior-year quarter. The growth primarily reflects higher revenues from Sikorsky.
However, operating profit decreased 23% year over year to $202 million and operating margin shrunk 600 bps to 6.1%.
Space Systems: Sales decreased 3% year over year to about $2.2 billion in the second quarter. The decrease reflects lower sales from various government satellite programs.
However, operating profit increased to $340 million from $294 million a year ago while operating margin expanded 250 bps to 15.3% in the quarter.
Financial Condition
Cash and cash equivalents were $1.27 billion at second-quarter end compared with $1.09 billion at 2015 end. Long-term debt almost remained on par at $14.307 billion with the 20156-end level of $14.305 billion.
Cash from operations in the second quarter was $1.47 billion compared with $1.26 billion in the year-ago quarter, up 16.6%.
During the quarter, the company repurchased 2.1 million shares for $501 million compared with 4.9 million shares repurchased for $937 million a year ago.
Guidance
Lockheed Martin raised its 2016 outlook with revenues expected to be in the range of $50 billion to $51.5 billion (earlier projection: $49.6 billion to $51.1 billion), earnings per share of $12.15–$12.45 (earlier projection: $11.50–$11.80) and operating profit of $5,725–$5,875 million (earlier projection: $5,625–$5,775 million).
Lockheed expects cash from operations of approximately $5.5 billion for the year (earlier projection: $5.4 billion).
Upcoming Peer Releases
The Boeing Co. (BA - Free Report) , General Dynamics Corp. (GD - Free Report) and Northrop Grumman Corp. (NOC - Free Report) are slated to report second-quarter 2016 results on Jul 27, before the opening bell.
Zacks Rank
Lockheed Martin carries a Zacks Rank #2 (Buy).
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Pentagon’s prime contractor, Lockheed Martin Corp. (LMT - Free Report) , reported second-quarter 2016 earnings of $3.32 per share, surpassing the Zacks Consensus Estimate of $2.92 by 13.7%. Earnings also increased 12.9% from the year-ago level owing to higher deliveries of F-35 fighter jets as well as higher sales from its Sikorsky helicopter unit.
Operational Highlights
In the reported quarter, total revenues came in at $12.91 billion, beating the Zacks Consensus Estimate of $12.53 billion by 3%.
The company’s revenues also increased 10.9% from $11.64 billion a year ago. All segments, except Space Systems and Information Systems & Global Solutions, registered year-over-year sales growth.
Backlog
Lockheed Martin ended the second quarter (on Jun 26, 2016) with $96.4 billion in backlog, down 3.2% from $99.6 billion at 2015 end. Of this, a $28.8 billion share went to the Aeronautics segment while Mission Systems and Training accounted for $29.5 billion. The rest comprised $18.5 billion for Space Systems, $15.3 billion for Missiles and Fire Control, and $4.3 billion for Information Systems & Global Solutions.
Quarterly Segmental Performance
Aeronautics: Quarterly sales increased 6% year over year to $4.4 billion, mainly on F-35 production contracts and sustainment activities during the quarter.
Operating profit also advanced 8% year over year to $478 million and operating margin increased 20 basis points (bps) to 10.9%.
Information Systems & Global Solutions: Quarterly sales decreased 5% to approximately $1.33 billion. The decline reflects the impact of completion of certain programs and heightened competition.
However, operating profit came in at $151 million, up 41% year over year and operating margin expanded 370 bps to 11.3%.
Missiles and Fire Control: Quarterly sales increased 2% year over year to $1.7 billion. The increase reflects higher revenues related to SNIPER and Special Operations Forces Contractor Logistics Support Services as well as from air and missile defense programs.
However, operating profit decreased 14% year over year to $253 million and operating margin contracted 270 bps to 15.1%.
Mission Systems and Training: Quarterly sales of $3.3 billion increased 53% from the prior-year quarter. The growth primarily reflects higher revenues from Sikorsky.
However, operating profit decreased 23% year over year to $202 million and operating margin shrunk 600 bps to 6.1%.
Space Systems: Sales decreased 3% year over year to about $2.2 billion in the second quarter. The decrease reflects lower sales from various government satellite programs.
However, operating profit increased to $340 million from $294 million a year ago while operating margin expanded 250 bps to 15.3% in the quarter.
Financial Condition
Cash and cash equivalents were $1.27 billion at second-quarter end compared with $1.09 billion at 2015 end. Long-term debt almost remained on par at $14.307 billion with the 20156-end level of $14.305 billion.
Cash from operations in the second quarter was $1.47 billion compared with $1.26 billion in the year-ago quarter, up 16.6%.
During the quarter, the company repurchased 2.1 million shares for $501 million compared with 4.9 million shares repurchased for $937 million a year ago.
Guidance
Lockheed Martin raised its 2016 outlook with revenues expected to be in the range of $50 billion to $51.5 billion (earlier projection: $49.6 billion to $51.1 billion), earnings per share of $12.15–$12.45 (earlier projection: $11.50–$11.80) and operating profit of $5,725–$5,875 million (earlier projection: $5,625–$5,775 million).
Lockheed expects cash from operations of approximately $5.5 billion for the year (earlier projection: $5.4 billion).
Upcoming Peer Releases
The Boeing Co. (BA - Free Report) , General Dynamics Corp. (GD - Free Report) and Northrop Grumman Corp. (NOC - Free Report) are slated to report second-quarter 2016 results on Jul 27, before the opening bell.
Zacks Rank
Lockheed Martin carries a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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