Pentagon’s prime defense contractor, Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2017 earnings from continuing operations of $3.23 per share, beating the Zacks Consensus Estimate of $3.10 by 4.2%. Earnings also surpassed the year-ago period’s bottom-line figure by 10.2%.
Operational Highlights
In the reported quarter, total revenue came in at $12.69 billion, which surpassed the Zacks Consensus Estimate of $12.47 billion by 1.8%.
Moreover, the company’s revenues increased 6.6% from $11.56 billion a year ago. Notably, all segments registered year-over-year growth in sales, except Missiles and Fire Control.
Backlog
Lockheed Martin ended the second quarter (on Jun 26, 2017) with $92.1 billion in backlog, down 1.5% from $93.5 billion at the end of the first quarter. Of this, the Aeronautics segment accounted for $32 billion while Rotary and Mission Systems contributed $26.7 billion. Also, $18.4 billion came from Space Systems, and $15 billion from Missiles and Fire Control.
Segmental Performance
Aeronautics: Sales increased 19% year over year to $5.2 billion, driven by higher net sales for the F-35, C-130 as well as C-5 programs.
Operating profit also advanced 15% year over year to $550 million, while operating margin dropped 40 basis points (bps) to 10.5%.
Missiles and Fire Control: Quarterly sales dropped 3% year over year to $1.6 billion due to slower sales from air and missile defense programs.
Operating profit increased 6% year over year to $268 million and operating margin expanded 130 bps to 16.4%.
Rotary and Mission Systems: Quarterly sales of $3.4 billion increased 3% from the prior-year quarter on higher revenues from Sikorsky as well as C4ISR & undersea systems & sensors (C4USS) programs.
Operating profit improved 26% year over year to $254 million, while operating margin expanded 130 bps to 7.4%.
Space Systems: Sales increased 9% year over year to about $2.4 billion in the second quarter, driven by sales improvement owing to the company’s increased interest in Atomic Weapons Establishment Venture.
Operating profit dropped 25% to $256 million while operating margin contracted 470 bps to 10.6% in the quarter.
Financial Condition
Cash and cash equivalents were $2.45 billion as of Mar 26, 2017 compared with $2.22 billion at the end of the first quarter. Long-term debt was $14.28 billion, almost in line with the first-quarter end level.
Cash from operations at the end of the second quarter was $3.2 billion compared with the first quarter’s level of $3.1 billion.
During the quarter, the company repurchased 1.9 million shares for $500 million compared with the buyback of 2.1 million shares for $501 million a year ago. The company paid dividends worth $525 million to its shareholders compared with the year-ago period’s level of $501 million.
Guidance
For 2017, Lockheed Martin has raised its financial guidance. The company expects to generate revenues in the range of $49.8–$51.0 billion, higher than the earlier provided projection of $49.5–$50.7 billion.
On the bottom-line front, the company now expects its earnings per share to be in the range of $12.30–$12.60 during 2017, higher than the earlier-announced guidance range of $12.15–$12.45.
However, the company has retained its 2017 expectations for cash from operations. Lockheed Martin continues to expect more than $6 billion cash from operations.
Zacks Rank
Lockheed Martin carries a Zacks Rank #3 (Hold).
Upcoming Peer Releases
Huntington Ingalls Industries, Inc. (HII - Free Report) is expected to report second-quarter 2017 results on Aug 3. The company has an Earnings ESP of +4.96% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Raytheon Company is expected to report second-quarter 2017 results on Jul 27. The company has an Earnings ESP of +0.57% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.
General Dynamics Corp. (GD - Free Report) is expected to report second-quarter 2017 results on Jul 26. The company has an Earnings ESP of +1.24% and a Zacks Rank #3.
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Pentagon’s prime defense contractor, Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2017 earnings from continuing operations of $3.23 per share, beating the Zacks Consensus Estimate of $3.10 by 4.2%. Earnings also surpassed the year-ago period’s bottom-line figure by 10.2%.
Operational Highlights
In the reported quarter, total revenue came in at $12.69 billion, which surpassed the Zacks Consensus Estimate of $12.47 billion by 1.8%.
Moreover, the company’s revenues increased 6.6% from $11.56 billion a year ago. Notably, all segments registered year-over-year growth in sales, except Missiles and Fire Control.
Backlog
Lockheed Martin ended the second quarter (on Jun 26, 2017) with $92.1 billion in backlog, down 1.5% from $93.5 billion at the end of the first quarter. Of this, the Aeronautics segment accounted for $32 billion while Rotary and Mission Systems contributed $26.7 billion. Also, $18.4 billion came from Space Systems, and $15 billion from Missiles and Fire Control.
Segmental Performance
Aeronautics: Sales increased 19% year over year to $5.2 billion, driven by higher net sales for the F-35, C-130 as well as C-5 programs.
Operating profit also advanced 15% year over year to $550 million, while operating margin dropped 40 basis points (bps) to 10.5%.
Missiles and Fire Control: Quarterly sales dropped 3% year over year to $1.6 billion due to slower sales from air and missile defense programs.
Operating profit increased 6% year over year to $268 million and operating margin expanded 130 bps to 16.4%.
Rotary and Mission Systems: Quarterly sales of $3.4 billion increased 3% from the prior-year quarter on higher revenues from Sikorsky as well as C4ISR & undersea systems & sensors (C4USS) programs.
Operating profit improved 26% year over year to $254 million, while operating margin expanded 130 bps to 7.4%.
Space Systems: Sales increased 9% year over year to about $2.4 billion in the second quarter, driven by sales improvement owing to the company’s increased interest in Atomic Weapons Establishment Venture.
Operating profit dropped 25% to $256 million while operating margin contracted 470 bps to 10.6% in the quarter.
Financial Condition
Cash and cash equivalents were $2.45 billion as of Mar 26, 2017 compared with $2.22 billion at the end of the first quarter. Long-term debt was $14.28 billion, almost in line with the first-quarter end level.
Cash from operations at the end of the second quarter was $3.2 billion compared with the first quarter’s level of $3.1 billion.
During the quarter, the company repurchased 1.9 million shares for $500 million compared with the buyback of 2.1 million shares for $501 million a year ago. The company paid dividends worth $525 million to its shareholders compared with the year-ago period’s level of $501 million.
Guidance
For 2017, Lockheed Martin has raised its financial guidance. The company expects to generate revenues in the range of $49.8–$51.0 billion, higher than the earlier provided projection of $49.5–$50.7 billion.
On the bottom-line front, the company now expects its earnings per share to be in the range of $12.30–$12.60 during 2017, higher than the earlier-announced guidance range of $12.15–$12.45.
However, the company has retained its 2017 expectations for cash from operations. Lockheed Martin continues to expect more than $6 billion cash from operations.
Zacks Rank
Lockheed Martin carries a Zacks Rank #3 (Hold).
Upcoming Peer Releases
Huntington Ingalls Industries, Inc. (HII - Free Report) is expected to report second-quarter 2017 results on Aug 3. The company has an Earnings ESP of +4.96% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Raytheon Company is expected to report second-quarter 2017 results on Jul 27. The company has an Earnings ESP of +0.57% and a Zacks Rank #3.You can see the complete list of today’s Zacks #1 Rank stocks here.
General Dynamics Corp. (GD - Free Report) is expected to report second-quarter 2017 results on Jul 26. The company has an Earnings ESP of +1.24% and a Zacks Rank #3.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>
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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