Lockheed Martin Corp. on Tuesday announced net sales of $12.7 billion and net earnings from continuing operations of $942 million for the second quarter of 2017. Net sales increased on a year-over-year basis from $11.6 billion and net earnings from $899 million, while cash from operations remained steady at $1.5 billion.
The company’s Space Systems business segment reported net sales of $2.4 billion, up by $194 million from the same quarter last year – an increase Lockheed largely attributed to net sales from AWE Management Ltd., which is under contract with the United Kingdom’s Defense Ministry to manage the nation’s nuclear deterrent sites. The segment’s operating profit landed at $256 million, down by $84 million from the same time last year, mostly due to lower equity earnings from the United Launch Alliance joint venture with Boeing, management said.
Lockheed subsidiary Sandia Corp., the former management and operations contractor for the National Nuclear Security Administration’s Sandia National Laboratories, operated within the Space Systems division. In May a Honeywell subsidiary took over the contract, worth $2.6 billion per year, ending Lockheed’s decades-long tenure at the site.
Another Lockheed subsidiary was awarded the Nevada National Security Site management contract last year, but the award was rescinded when the NNSA discovered ownership of that subsidiary had been transferred to Leidos. The contract was ultimately awarded to a Honeywell-led partnership in May.
Company executives did not discuss their bids for NNSA work during a Tuesday earnings call. Asked about the impact during the quarter of the loss of the Sandia contract, a spokesman said the company does not offer “program-specific financial information” beyond that covered in the earnings release.
Lockheed President and CEO Marillyn Hewson during the call commented on the defense authorization process underway in Congress. “We are encouraged to see the recognition that our defense budgets require increased levels of funding,” she said of the fiscal 2018 budget proposals from the House and Senate Armed Services committees.
Lockheed is among the bidders for the Defense Department’s Ground-Based Strategic Deterrent program and Long-Range Standoff nuclear cruise missile contracts.
The Air Force is due to award up to two contracts in the fourth quarter of this fiscal year for the advanced development phases of both programs: the GBSD intercontinental ballistic missile, which will replace the aging Minuteman III ICBM, and the LRSO, which will replace the aging air-launched cruise missile.
The service has requested $451 million for the LRSO for fiscal 2018 – up from its current $96 million – and $216 million for GBSD, up from $114 million. The programs’ advanced development phases are intended to refine project requirements and identify technologies for integration into the full system.
