Lockheed Martin Keeps 2020 Guidance
April 21 2020 - 7:32AM
Dow Jones News
By Doug Cameron
Lockheed Martin Corp. on Tuesday kept its 2020 guidance largely
unchanged as it mitigated the impact of the coronavirus pandemic on
production and its supply chain.
The defense sector has continued to operate through
coronavirus-driven shelter-in-place restrictions, deemed an
essential sector, with the Pentagon disclosing that only around 1%
of the broader supply base is shuttered.
Big contractors like Lockheed Martin have provided additional
payments to support smaller companies, and with the Pentagon
accelerating some of its own funding and contract awards, companies
have also pivoted some production capacity to produce medical
supplies.
The lack of business interruption helped Lockheed Martin, the
world's largest defense company by sales, maintain existing profit
guidance for 2020, with only a small trim to its revenue
outlook.
Lockheed Martin's footprint across air, space, sea and land
systems makes it a proxy for Pentagon spending, with U.S.
government outlays rising 6% in the first quarter from a year
earlier, including a 31% jump in March.
The company reported profit of $1.7 billion in the March
quarter, flat with a year earlier. Per-share earnings rose to $6.08
from $5.99, above the $5.80 consensus among analysts polled by
FactSet. Sales climbed to $15.7 billion from $14.3 billion a year
earlier.
Lockheed Martin expects sales to rise to as high as $64 billion
this year, trimming just $250 million from the top end of its
guidance because of pandemic-related disruption.
Profit is still forecast at between $23.65 and $23.95 a share,
and free cash-flow guidance was left unchanged.
The Pentagon plans to seek billions of dollars more to
supplement its budget to counter disruption to production, noting
some impact in areas such as shipbuilding and aerospace that could
lead to delays of around three months on some programs.
Defense-sector shares have recovered most of their losses from
the broader market collapse in late February and March.
Lockheed Martin was up almost 2% in preopen trade.
The company last month appointed telecom-industry veteran James
Taiclet to succeed Marillyn Hewson as Chief Executive in June. Mr.
Taiclet has been CEO of American Tower Corp. since 2004.
He joined Lockheed Martin's board two years ago, having worked
for a variety of other big aerospace companies. He formerly ran the
aerospace services unit at Honeywell International Inc., and was a
senior executive at the Pratt & Whitney unit of Raytheon
Technologies Corp., which makes the engines for the F-35 combat
jet.
Ms. Hewson will stay on as executive chairman.
Defense companies have wrestled with the impact of the
coronavirus, especially on classified activities accounting for 20%
or more of their business.
Lockheed Martin and peers have halted all but mission-critical
travel and increased telecommuting, but classified work has to be
conducted in-person at secure facilities. The Bethesda, Md.,
defense contractor said it has staggered shifts at its secure
facilities and introduced flexible working practices to limit
interaction.
Write to Doug Cameron at doug.cameron@wsj.com
(END) Dow Jones Newswires
April 21, 2020 08:17 ET (12:17 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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