What Can We Expect From Lockheed Martin’s Q3 Earnings?

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Lockheed Martin (NYSE: LMT) is all set to report earnings for Q3 on October 24. The company has been doing quite well in the year so far. In the previous quarter, it managed to post an earnings beat, while revenues came in marginally lower year-over-year. That said, the world’s largest defense contractor incurred heavy one-time charges on some of its major programs in Q1. These charges are expected to weigh on earnings over the remainder of the year. Full year earnings are now expected to come in lower than expected at $12.15–$12.45. In terms of sales, the company hopes to take in around $49.5–$50.7 billion, higher than the earlier provided projection of $49.4–$50.6 billion.

Key Happenings:

  • Due to its varied product offerings, Lockheed Martin continues to enjoy its position as the world’s largest defense contractor. In this respect, the company managed to receive a number of important deals in the quarter, from the DoD as well as other foreign allies. The company managed to land an $80 million deal with the Air Force Nuclear Weapons Center to conduct the Airborne Launch Control System Replacement (ALCS-R) program. Additionally, it secured a mammoth $3.8 billion deal with Bahrain Defense Force to supply it with 16 F-16 aircraft.
  • Last quarter, Saudi Arabia mentioned its plans to procure the company’s integrated air and missile defense, combat ship, tactical aircraft, and rotary wing technologies and programs for an estimated $28 billion. This deal is expected to add significant value to the company over the next decade. We can expect to learn more on this deal in the upcoming earnings call.
  • In terms of the F-35, the company is ready to ramp up production as orders continue to roll in. Earlier in the year, Lockheed signed a deal to begin production of the tenth batch of the aircraft and was awarded an additional $5.6 billion deal, during the Q2, to begin production of the eleventh batch. The company hopes to deliver close to 66 jets over the year, however, the Pentagon expects this number to be closer to 57.
  • The company recently announced its plans to push for growth in their international markets. Over the next five years, the company projects 50% of all F-35 orders to come from international customers. This is primarily because Lockheed is seeing increased interest from countries outside the current program of record. Last year, it was revealed that the company was in talks with Spain, Belgium, and Switzerland about selling them the F-35. At present, the defense contractor is partnered with the U.K., Italy, the Netherlands, Japan, Turkey, Australia, and Israel, among others. The upcoming earnings call is bound to shed some light on this.

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