Lockheed Martin on Tuesday reported strong second-quarter financial results driven by higher sales, lower taxes, a pension benefit and improved operating performance.
Net income increased 26 percent to $1.2 billion, $4.05 earnings per share (EPS), from $955 million ($3.28 EPS) a year ago, topping consensus estimates by 13 cents per share. Earnings were higher despite a $76 million (26 cents EPS) after-tax charge related to severance expenses and restructuring activities.
Sales increased nearly 7 percent to $13.4 billion from $12.6 billion a year ago.
The Aeronautics, Missiles and Fire Control, and Rotary and Mission systems segments drove the top line growth, with F-35 production, F-22 sustainment, THAAD and PAC-3 missile defense programs, LANTIRN and SNIPER targeting pods, radar surveillance systems, Aegis radar, and C6ISR programs all contributing to the gain.
Bruce Tanner, Lockheed Martin’s chief financial officer, on the company’s earnings call cited three “factors” that drove the sales growth in the quarter. First, he said, is higher than planned win rates, noting, that the company typically wins around 65 to 70 percent of the competitions it enters but achieved higher, particularly in the Missiles and Fire Control segment.
The second factor is awards coming sooner than planned, and third, is unplanned awards related to the fiscal year 2018 Omnibus spending bill that was approved in March. Tanner said it has been a “surprise” how quickly FY ’18 funds have been put under contract.
There hasn’t been a pull forward in contract awards, Tanner said, adding that the work is a benefit for the company this year and in the future. He also said that there have been fewer post-award delays, such as protests, to contract wins, leading to sales sooner.
