Lockheed Martin Corp. on Tuesday announced net sales of $12.9 billion and net earnings of $1 billion for the second quarter of 2016. Net sales increased from $11.6 billion in the same quarter of last year, while net earnings rose from $929 million in that same time period.
Lockheed Martin subsidiary Sandia Corp. is the management and operations contractor for the Sandia National Laboratories. The company announced in 2012 a reorganization transferring Sandia Corp. to its Space Systems division, one of Lockheed’s five business segments.
Lockheed reported just over $2.2 billion in net sales for Space Systems in the second quarter, down from nearly $2.3 billion in the same quarter of last year. The $71 million – or 3 percent – decrease was attributable primarily to lower net sales for government satellite programs.
The company also reported $340 million in operating profit for the division, up from $294 million in the same time period of 2015. The $46 million increase, or 16 percent, was attributable to increased equity earnings in joint ventures.
Lockheed’s earnings report did not break out numbers for Sandia Corp., and company executives leading a Tuesday earnings call did not mention the subsidiary.
Sandia Corp.’s contract with the National Nuclear Security Administration expires at the end of April 2017. The agency is now considering bids in an open competition for a follow-on contract to manage and operate the labs.
Net sales in Lockheed’s Information Systems and Global Solutions (IS&GS) business segment dropped by $71 million to $1.3 billion in the second quarter, which management attributed to “lower net sales of approximately $50 million as a result of the completion of certain programs to provide IT solutions to U.S. defense and intelligence agencies.” This business segment contains the Mission Support Alliance team supporting the Department of Energy’s Hanford Site in Washington state.
This segment’s operating profit increased $44 million to $151 million in the second quarter, year over year, primarily because of higher operating profit from contract close-out activities and the completion of some programs.
Lockheed CEO Marillyn Hewson said Tuesday the $5 billion transfer of the IS&GS division to Leidos will be completed in the third quarter of this year. “Significant progress towards transaction closure continues to be achieved,” Hewson said during the earnings call.
According to Lockheed’s latest SEC filing, “the [company’s] outlook for 2016 will be updated to exclude the IS&GS business when and if the transaction closes.”
Lockheed’s financial outlook for 2016 includes $50 billion to $51.5 billion in net sales and $5.2 billion to $5.3 billion in business segment operating profit.
