Lockheed Martin Corp. (NYSE:LMT) reported first-quarter 2018 earnings from continuing operations of $4.02 per share, which surpassed the Zacks Consensus Estimate of $3.35 by 20%. The earnings figure also came in higher than the year-ago figure of $2.69 per share, by 49%.
Operational Highlights
In the reported quarter, total revenues came in at $11.64 billion surpassing the Zacks Consensus Estimate of $11.30 billion by 2.9%. The top line was also up 3.8% from $11.21 billion a year ago. Notably, all segments registered year-over-year growth in sales, except Space Systems.
Backlog
Pentagon’s prime defense contractor, Lockheed Martin, ended the first quarter (on Mar 25, 2018) with $104.8 billion in backlog, down 0.7% from $105.5 billion at the end of first-quarter 2017. Of this, the Aeronautics segment accounted for $35.1 billion while Rotary and Mission Systems contributed $30.1 billion. Also, $21.5 billion came from Space Systems and $18 billion from Missiles and Fire Control.
Segmental Performance
Aeronautics: Revenues at this segment increased 7% year over year to $4.4 billion. The improvement was primarily driven by higher net sales from the F-35 program on account of increased production and sustainment volume. Increased net sales for other combat aircraft modernization programs backed by volume expansion also boosted the segment’s top line.
While operating profit advanced 8% year over year to $474 million, operating margin expanded 10 bps to 10.8%.
Missiles and Fire Control: Quarterly sales rose 8% year over year to $1.7 billion owing to higher net sales for increased volume on classified programs as well as tactical missiles programs backed by increased volume.
Operating profit improved 12% year over year to $261 million, while operating margin expanded 50 bps to 15.6%.
Rotary and Mission Systems: Quarterly sales of $3.2 billion grew 3% on account of higher sales for training and logistics solutions programs, integrated warfare systems and sensors programs as well as command, control, communications, computers, cyber, combat systems, intelligence, surveillance, and reconnaissance (C6ISR) programs.
Operating profit improved a solid 143% year over year to $311 million and operating margin expanded 550 bps to 9.6%.
Space Systems: Revenues at this segment dropped 3% year over year to about $2.3 billion in the first quarter. The decline can be primarily attributed to lower volumes for government satellite programs and commercial satellite programs.
Operating profit was down 9% to $264 million, while operating margin contracted 70 bps to 11.3% in the quarter.
Financial Condition
Cash and cash equivalents were $2.39 billion as of Mar 25, 2018 compared with $2.86 billion as of Dec 31, 2017. Long-term debt was $13.47 billion compared with $13.51 billion as of Dec 31, 2017.
Cash from operations at the end of the first quarter was $0.6 billion compared with $1.7 billion at the end of year-ago quarter.
In the quarter under review, Lockheed Martin repurchased 0.9 million shares for $300 million compared with the buyback of 1.9 million shares for $500 million a year ago. Also, the company paid dividends worth $586 million to shareholders compared with the year-ago period figure of $544 million.
Guidance
Lockheed Martin has raised its 2018 financial guidance. The company expects to generate revenues in the range of $50.4-$51.9 billion compared with the prior guidance range of $50.0-$51.5 billion.
On the bottom-line front, the company expects 2018 GAAP earnings per share to be in the band of $15.80-$16.10, up from the earlier guidance of $15.20-$15.50.
Zacks Rank
Lockheed Martin carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Peer Release
Textron Inc. (NYSE:TXT) reported first-quarter 2018 earnings from continuing operations of 72 cents per share, which surpassed the Zacks Consensus Estimate of 46 cents by 56.5%. Notably, the bottom line was up 94.6% from 37 cents in the year-ago quarter.
Upcoming Peer Releases
Boeing (NYSE:BA) is expected to report first-quarter results on Apr 25. The company has an Earnings ESP of +1.70%.
Embraer S.A. (NYSE:ERJ) has an Earnings ESP of +450.00%. The company is slated to release first-quarter results on Apr 27.
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