Lockheed Martin (LMT) posted weaker-than-expected second quarter earnings Tuesday, while cutting its full-year profit outlook, thanks in part to supply chain disruptions and slowing F-35 sales.
Shares in the group turned higher in late-morning trading, however, as investors factored-in the impact of a potential $30 billion deal with the Pentagon to build nearly 400 of the workhorse fighter jets.
Lockheed Martin said earnings for the three months ending in June came in at $1.16 per share, down 82% from the same period last year and well shy of the Street consensus forecast of $1.73 per share. Group revenues, Lockheed Martin said, fell 9.6% to $15.4 billion, again missing analysts' estimates of a $16.05 billion tally. Aeronautics sales, where the group's F-35 fighter jet program is based, fell 12% to $5.8 billion, Lockheed Martin said.
The defense group also lowered its forecast for 2022 sales to around 65.25 billion, 1.1% reduction from its prior estimate, diluted earnings in the region of $21.55, down from its three-month old forecast of between $26.70 to $27.00 per share.
"Lockheed Martin continued to deliver strong and consistent cash generation, returning over $1 billion in cash to shareholders in the second quarter through our industry leading dividend and our ongoing share repurchase program," said CEO James Taiclet. "Although revenue in the period was affected by supply chain impacts and the timing of customer contract negotiations, our cost management initiatives resulted in margin expansion."
"Moreover, our robust cash generation also continues to provide the resources to invest in building the foundation for future revenue and margin growth opportunities through our classified program capex projects, hypersonics development efforts, and our 21st Century Security and internal Digital Transformation initiatives," he added.
Lockheed shares were marked 0.22% higher in late morning trading Tuesday following earnings release to change hands at $388.00 each, a move that leaves the stock with a year-to-date gain of around 8%.
Last last night, Lockheed Martin reached a 'handshake" agreement with the U.S. Department of Defense on a three year, $30 billion deal to build around 375 F-35 fighter jets.
Details of the agreement, however, which are expected to be hammered out over the next few months, could be impacted by changes to the Pentagon budget, but Lockheed noted that it has been able to achieve "a cost per jet lower than record-breaking inflation trends."
