Lockheed Martin [LMT] on Tuesday reported lower sales in its third quarter and reduced its outlook for revenue for 2021 with further declines expected in 2022 before rebounding to growth beginning in 2023.
Combined with the depressed sales outlook at least through 2022 and a cut to the forecast for operating cash flow this year, investors sent Lockheed Martin’s shares down $44.43, nearly 12%, to close at $331.90 on Tuesday.
Earnings this year are expected to be about $22.45 earnings a share, up from the previous outlook of between $21.95 and $22.25 a share. Operating cash flow is expected to be at least $8.3 billion, down from the prior forecast of at least $8.9 billion.
For 2022, sales are expected to be about $66 billion, segment operating margin 11%, and operating cash flow at least $8.4 billion. The slump is due to supply chain impacts, slower U.S. defense budget growth, the withdrawal of U.S. forces from Afghanistan, the loss of the U.K.’s Atomic Weapons Establishment (AWE) work, and the new baseline for F-35 production at lower peak rates, Taiclet said.
The largest headwinds going into 2022 is the loss of the AWE work, which is close to $900 million, a $600 million combined decline in the UH-60 Black Hawk helicopter and Next-Generation Overhead Persistent Infrared satellite programs, a decrease of about $400 million in the F-35 program, and $200 million for a Special Operations logistics support program related to the U.S. withdrawal of forces from Afghanistan, Mollard said.
The United Kingdom nationalized its Atomic Weapons Establishment in July.
Net income in the 2021 third quarter was $614 million, $2.21 earnings a share, about one-third of the $1.8 billion, or $6.25 a share, in profit a year ago. The result still topped consensus estimates by 29 cents a share.
A non-cash charge related to previously announced pension costs chopped $1.3 billion, or $4.72 a share, from the bottom line.
At the operating level, all four of the company’s segments posted higher income. Profit drivers included the Fleet Ballistic Missile (FBM) and hypersonic missile development programs, risk retirements on several helicopter programs and higher volume for the Combat Rescue Helicopter at the Sikorsky business unit. Lockheed remains the prime contractor on the Trident II D5 submarine-launched ballistic missiles carried at sea by the nuclear-armed Ohio-class ballistic missile submarines.
Sales in the quarter shrank 3% to $16 billion from $16.5 billion a year ago on declines at the Space, Missiles and Fire Control, and Aeronautics segments.
A version of this story first appeared in Weapons Complex Monitor’s affiliate publication, Defense Daily.
