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Lockheed Martin swings to profit in Q4 but misses estimates

Lockheed Martin (LMT) swung to a profit in the fourth quarter from a loss last year, which included a one-time charge related to the estimated impacts of the tax reform. The top line exceeded analysts’ expectations while the bottom line missed consensus estimates. Also, the defense contractor guided full-year 2019 earnings below the Street’s view.

Net income was $1.25 billion or $4.39 per share compared to a loss of $744 million or $2.60 per share in the previous year quarter. Excluding the estimated impacts of the Tax Act, adjusted earnings from continuing operations were $1.2 billion or $4.03 per share in the fourth quarter of 2017.

Net sales rose 4.1% to $14.4 billion. The company posted year-over-year sales increases in three of its business segments.

Looking ahead into the full year 2019, the company predicts net sales in the range of $55.75 billion to $57.25 billion and earnings in the range of $19.15 to $19.45 per share. Business segment operating profit is expected to be $6 billion to $6.15 billion.

Lockheed Martin Q4 2018 Earnings Infographic

The company expects the 2019 net FAS/CAS pension benefit to be about $1.5 billion based on a 4.25%, a negative 5% return on plan assets in 2018, a 7% expected long-term rate of return on plan assets in future years, and the revised longevity assumptions released during the fourth quarter of 2018 by the Society of Actuaries.

In the Aeronautics segment, sales increased 4% primarily attributable to higher net sales for the F-35 and the F-16 programs due to increased volume. In Missiles and Fire Control, net sales improved 22%, primarily due to higher sales for tactical and strike missiles programs as well as integrated air and missile defense programs.

In Space, segment sales rose 2%, driven primarily by higher sales in Orion program, strategic and missile defense programs, and government satellite programs. However, Rotary and Mission Systems segment sales fell 4% in the quarter, due to lower sales for Sikorsky helicopter programs, which reflect lower volume for Black Hawk production.

Shares of Lockheed Martin ended Monday’s regular session up 0.29% at $287.87 on the NYSE. The stock has fallen over 16% in the past year and over 5% in the past three months.

 

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