By Mike Stone
Lockheed Martin Corp (NYSE:LMT) reported a better-than-expected 47 percent jump in quarterly profit on Tuesday and raised its annual profit forecast, helped by strong demand for its missiles and fighter jets, sending its shares up 5 percent.
The Pentagon's biggest weapons supplier is the first major defense company to report first-quarter earnings this week, which Wall Street generally expects to be higher than a year ago as the industry benefits from increased U.S. defense spending and global demand for jets and munitions.
Lockheed's Missiles and Fire Control business, which makes missile defenses like the Terminal High Altitude Area Defense (THAAD), was one of its best-performing units.
On April 1, the unit was awarded a THAAD interceptor missile contract worth $2.4 billion, some of which are slated to be delivered to Saudi Arabia, which could boost earnings for the current quarter.
Overall, the Bethesda, Maryland-based company said its earnings rose to $1.70 billion, or $5.99 per share, in the first quarter ended March 31, from $1.16 billion, or $4.02 per share, a year earlier. That was partly helped by a $75 million dollar boost from additional tax deductions on foreign military sales.
Excluding that one-time gain, Lockheed reported $5.73 per share profit, well ahead of the $4.34 per share that Wall Street had expected, on average, according to IBES data from Refinitiv.
Lockheed's overall net sales for the quarter rose 23 percent to $14.34 billion. The company's sales backlog grew to $133.5 billion, up 3 billion over the quarter.
Lockheed shares were up 5.6 percent at $332.89 in early trading.
JET SALES UP
Operating margins at the aeronautics division, Lockheed's biggest, fell to 10.5 percent in the first quarter from 10.8 percent a year earlier, but sales were up 27 percent to $5.5 billion on demand for the F-35 jet and some classified contracts.
The United States is considering expanding sales of Lockheed-made F-35 fighter jets to five new nations including Romania, Greece and Poland as European allies bulk up their defenses in the face of a strengthening Russia, a Pentagon official told Congress in early April.
The F-35, a key program for Lockheed, suffered a setback earlier this month when a Japanese F-35 stealth fighter crashed in the Pacific Ocean close to northern Japan. The aircraft was less than a year old and was the first F-35 assembled in Japan.
The company highlighted some risks in its earnings report, including U.S. "government actions to prevent the sale or delivery of the corporation's products" to Turkey.
The U.S. Congress recently introduced several bipartisan resolutions targeting Turkey, calling on President Donald Trump's administration to impose sanctions or prohibit the transfer of F-35 fighter aircraft.
At issue is Ankara's unwillingness to reverse a decision to purchase a Russian-made missile defense system, forcing the United States to explore a future for the F-35 program without Turkey, which makes parts of the fuselage, landing gear and cockpit displays.