More work on nuclear-tipped missiles contributed to yearly and quarterly earnings gains in 2018 at Lockheed Martin, the Bethesda, Md.-based defense giant announced this week.
Lockheed’s 2018 net earnings from continuing operations were more than $5 billion, or $17.59 a share in 2018: up more than two-and-a-half times from just under $2 billion in 2017. In 2017, Lockheed took a $2-billion charge related to the federal tax bill that passed that year, along with a $110 million fourth-quarter charge related to a joint venture.
Lockheed’s total sales in 2018 rose about 7.5 percent to more than $53.5 billion from about $50 billion in 2017, according to a Tuesday press release.
Fourth-quarter net earnings from continuing operations were a little over $1.2 billion, up sharply from a loss of $817 million in 2017, when the company booked its big charge related to the tax bill. Quarterly sales were just under $14.5 billion, up about 4 percent from less than $14 billion in 2017.
Lockheed has all but exited the Department of Energy’s nuclear weapons complex, having sold its Information Systems & Global Solutions business to Leidos in 2016. The company formerly had a presence in the environmental cleanup mission at the Hanford Site in Washington State, the Nevada National Security Site, which still has active nuclear security missions, and managed the Sandia National Laboratory solo for more than 20 years, until 2017.
Through its extensive Pentagon contracts, however, the Lockheed is still a keystone player in the U.S. nuclear deterrent.
Lockheed’s Missiles and Fire Control segment — which includes technology development work on the next-generation, nuclear-tipped air-launched cruise missile the Department of Defense plans to field next decade — had the strongest 2018 of any of the company’s business segments.
For Missiles and Fire Control, 2018 operating profit was about $1.2 billion, up some 20 percent from about $1 billion in 2017. Missile sales rose to about $21 billion, up more than 15 percent from roughly $19.5 billion in 2017.
Lockheed executives did not not mention the next-generation cruise missile, the Long-Range Standoff Weapon, during their earnings call this week. Quarterly operating profit in the missile segment was just over $375 million, more than 50 percent higher than the roughly $250 million the segment pulled in in 2017.
Lockheed and Raytheon are working on competing designs for the Long-Range Standoff Weapon under four-and-a-half-year, $900-million Pentagon contracts awarded in 2017. The missile will be tipped with W80-4 warheads furnished by the Energy Department’s National Nuclear Security Administration (NNSA) and could fly aboard the Air Force’s B-52, B-2 Spirit, and B-21 aircraft.
The Pentagon plans to choose from between the Lockheed and Raytheon designs in fiscal 2022, then deploy the Long-Range Standoff Weapon in 2025 or so. Last year, the NNSA budget for its W80-4 life-extension program was boosted by 65 percent to $655 million to ensure the weapon’s refurbishment paces development of the cruise missile that will carry it.
Meanwhile, in the Space segment that includes Lockheed’s work on the nuclear-tipped Trident II-D5 missiles carried aboard Ohio-class submarines, 2018 operating profit was a bit more than $1 billion, up some 7.5 percent from about $980 million in 2017. Segment sales rose to nearly $10 billion in 2018, rising nearly 3 percent from $9.5 billion in 2017. Pentagon contracts awarded in September to modify the Trident missiles figured into the boost.
Fourth-quarter operating profit at Space rose about 4 percent to nearly $225 million from around $215 million a year ago, Lockheed said. Quarterly sales were roughly $2.5 billion, up about 2 percent from a little under $2.5 billion in 2017.
