Lockheed Martin Corp. (LMT - Free Report) reported second-quarter 2020 adjusted earnings of $6.13 per share, which surpassed the Zacks Consensus Estimate of $5.71 by 7.4%.
Including an impairment charge of 34 cents, the company reported earnings of $5.79 per share. The bottom line also improved 15.8% from the year-ago quarter’s $5. This year-over-year upside can be attributed to higher sales.
Operational Highlights
In the reported quarter, net sales amounted to $16,220 million, which outshined the Zacks Consensus Estimate of $15,235 million by 6.4%. The reported figure also increased 12.4% from $14,427 million a year ago, driven by sales growth in all its segments.
Lockheed Martin Corporation Price, Consensus and EPS Surprise
Lockheed Martin Corporation price-consensus-eps-surprise-chart | Lockheed Martin Corporation Quote
Backlog
Lockheed Martin ended the second quarter (on Jun 28, 2020) with $150.3 billion in backlog, up 4.4% from $144 billion at the end of 2019. Of this, the Aeronautics segment accounted for $56.2 billion, while Rotary and Mission Systems contributed $37.2 billion. Space Systems contributed $25.9 billion and $31 billion came from the Missiles and Fire Control segment.
Segmental Performance
Aeronautics: Sales increased 17% year over year to $6.53 billion, primarily driven by higher net sales from the F-35 programs. Also, higher volume of classified development contracts contributed to sales growth at this unit.
The segment’s operating profit improved 25% year over year to $739 million. Operating margin expanded 70 basis points (bps) to 11.4%.
Missiles and Fire Control: Quarterly sales improved 16% year over year to $2.80 billion owing to higher sales from tactical and strike missile programs as well as integrated air and missile defense programs.
The segment’s operating profit increased 13% year over year to $370 million, whereas operating margin contracted 40 bps to 13.2%.
Rotary and Mission Systems: Quarterly sales of $4.04 billion improved 7% from the prior-year quarter on account of higher sales for Sikorsky helicopter programs driven by Seahawk production programs and VH-92A production contracts.
The segment’s operating profit improved 24% year over year to $429 million, while operating margin contracted 140 bps to 10.6%.
Space Systems: Sales rose 7% year over year to about $2.87 billion in the first quarter. The uptick was driven by government satellite programs as well as strategic and missile defense programs.
The segment’s operating profit declined 13% to $252 million. Operating margin contracted 190 bps to 8.8% in the reported quarter.
Financial Condition
Lockheed Martin’s cash and cash equivalents totaled $2.86 billion as of Jun 28, 2020, compared with $1.51 million at the end of 2019. Long-term debt was $12.17 billion, higher than the prior-year-end level of $11.40 billion.
Cash from operations at the end of second-quarter 2020 amounted to $4.50 billion compared with $3.33 billion a year ago.
During the reported quarter, the company repurchased 0.7 million shares for $259 million compared with the buyback of 0.6 million shares for $219 million in the year-ago quarter.
Lockheed Martin paid out dividends worth $671 million to its shareholders in the second quarter compared with the year-ago quarter’s figure of $622 million.
Guidance
For 2020, Lockheed Martin has raised its financial guidance. The company currently expects to generate revenues of $63.50-$65 billion, higher than the range of $62.25-$64 billion projected earlier. The Zacks Consensus Estimate for full-year revenues, pegged at $63.51 billion, lies below the midpoint of the updated guidance.
Earnings per share are currently anticipated to be in the band of $23.75-$24.05 for 2020, compared with the earlier range of $23.65-$23.95. The Zacks Consensus Estimate for the company’s full-year earnings, pegged at $24.05, is in line with the higher end of the guidance range.
Zacks Rank
Lockheed Martin currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Q2 Defense Releases
Boeing (BA - Free Report) will release its results on Jul 29.
General Dynamics (GD - Free Report) will release its results on Jul 29.
Northrop Grumman (NOC - Free Report) will release its results on Jul 30.
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