Lockheed Lifts Profit Outlook as F-35 Bolsters Sales Backlog

(Bloomberg) -- Lockheed Martin Corp. raised its full-year profit and sales forecast as the world’s largest defense company expanded its backlog with multibillion-dollar F-35 fighter and missile sales in the second quarter.

• Adjusted earnings rose to $5 a share, Lockheed said in a statement Tuesday. That compared with the $4.78 average of analyst estimates compiled by Bloomberg.
• Lockheed raised its sales prediction to at least $58.3 billion from at least $56.8 billion in April. The contractor boosted the forecast for cash from operations by $100 million to $7.6 billion.

Key Insights

• The Bethesda, Maryland-based company is following its familiar pattern of beating and raising its forecasts as the year progresses, only this time it’s building on a surprisingly strong start to the year. First-quarter earnings were 38% higher than estimates.
• The record $136.7 billion backlog was bolstered by a $2.9 billion contract for upkeep of the stealthy F-35 fighters, the Pentagon’s most expensive weapons system. But Lockheed still hasn’t reeled in the biggest F-35 deal ever, a multiyear contract for about 440 fighters, despite a “handshake” deal to drop the price for the most popular variant to about $80 million a copy.
• On an 11 a.m. conference call with Chief Executive Officer Marillyn Hewson, analysts will probably press for details on a scrapped F-35 sale to Turkey, and on Lockheed’s plans for growth, said Bloomberg Intelligence analyst Douglas Rothacker. They’re also likely to ask if Lockheed is scouting acquisitions now that rival Raytheon Co. is merging with United Technologies Corp.

Market Reaction

• The shares fell less than 1% to $355.46 at 9:35 a.m. in New York. Lockheed advanced 37% this year through Monday, exceeding the 24% gain of a Standard & Poor’s index of aerospace and defense companies.

Get More

• Company statement
• Additional details
• For more on the suspended deal with Turkey, click here. For details of Lockheed’s handshake deal with the Pentagon, click here.

To contact the reporter on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Susan Warren

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