Pentagon nuclear arsenal modernization prime Northrop Grumman exceeded expectations with its third-quarter earnings Wednesday, while fellow nuke prime Lockheed Martin underperformed the Wall Street consensus.
Northrop posted a 10-percent earnings increase over the year-ago quarter on a 6-percent rise in quarterly revenue. Earnings per share of $3.68 beat the Wall Street consensus of $2.90, as reported by the website MarketWatch, while revenue in the quarter ended Sept. 30 rose to just over $6.5 billion: $200 million above the analyst consensus.
Lockheed Martin’s stock price, on the other hand, tumbled Tuesday after its third-quarter earnings came in lower than analysts expected. The stock dropped 2.36 percent, to $313.15, at the end of trading on the New York Stock Exchange Tuesday and slid to $307.89 at Thursday’s close.
During the quarter just ended, Boeing and Northrop Grumman secured contracts to mature technology for a next-generation intercontinental ballistic missile (ICBM) system that will replace the aging, nuclear-tipped Minuteman III. Northrop’s is worth almost $330 million over three years. The Air Force plans to select a single ICBM contractor in 2020, with a solicitation for the work set to appear in 2019.
The U.S. intercontinental ballistic missile fleet is armed with W-78 and W87 warheads furnished by DOE’s National Nuclear Security Administration. Sometime in the 2030s, the ICBM fleet would transition to the yet-to-be-built family of interoperable warheads.
Also during the quarter, Northrop announced it would acquire medium-sized aerospace and defense contractor Orbital ATK, of Dulles, Va. The move give the Falls Church, Va.-based aerospace giant a stake in Consolidated Nuclear Security: DOE’s prime contractor for the Y-12 National Security Complex in Oak Ridge, Tenn., and the Pantex Plant weapons assembly and disassembly facility near Amarillo, Texas.
That would somewhat balance the company’s exit from the Nevada National Security Site this year. Northrop Grumman is a member of site prime National Security Technologies and partnered in a bid to keep the contract, but ultimately lost the $5-billion, 10-year pact to Honeywell-led Mission Support and Test Services.
Meanwhile, at Bethesda, Md.-based Lockheed, earnings per share landed at $3.24 for the quarter ended Sept. 24, down 10 percent year over year, excluding discontinued operations. That missed Wall Street’s consensus by 2 cents a share. Quarterly revenue rose about 5 percent to $12.7 billion, which still missed Wall Street’s forecast by $640 million.
Lockheed CEO Marillyn Hewson emphasized the company’s winning record in the quarter in a press release published Tuesday.
“Our continued focus on operational performance and meeting our delivery commitments has enabled us to increase our financial guidance and post a record [$104 billion] backlog that supports long term growth,” Hewson said.
In the quarter, Lockheed bagged one of the Pentagon’s big nuclear modernization contracts. Along with Raytheon, Lockheed will develop technology for a next-generation air-launched nuclear-tipped cruise missile known as the Long-Range Standoff weapon under a three-year contract worth about $900 million. The missile, which will be tipped with W80-4 warheads furnished by the National Nuclear Security Administration, will fly aboard the Air Force’s B-52, B-2 Spirit, and B-21 aircraft.
In the year-ago quarter, Lockheed had a greater presence in the DOE nuclear complex through its Information Systems and Global Solutions (IS&GS) business: the major partner on Hanford Site support contractor Mission Support Alliance. Lockheed transferred IS&GS to Leidos in August 2016.
The deal, however, cost Leidos lost a chance to manage the Nevada National Security Site. When Leidos acquired IS&GS, it also inherited Nevada Site Science Support and Technologies Corp., a bidder for the Nevada site contract. However, DOE revoked that award in August 2016 after learning of the change of ownership, then gave Mission Support and Test Services the contract in the second procurement process.
