Lockheed beats estimates on F-35 sales, maintains guidance

By Mike Stone

WASHINGTON (Reuters) -U.S. weapons maker Lockheed Martin Corp (NYSE:LMT) reported better-than-expected quarterly revenue on Tuesday, helped by higher sales in its aeronautics unit, which makes the F-35 fighter jet, as the company sees demand for arms increasing after Russia's invasion of Ukraine.

Shares were up as much as 7.5% to $427.27 during trading in New York after Chief Financial Officer Jay Malave told analysts on a post-earnings conference call that percentage wise the company would grow "low single digit for 2024 as a baseline."

The company would also look internally to save costs, management said on the call.

The maker of the High Mobility Artillery Rocket System (HIMARS) launchers and their ammunition, which Ukraine is using to beat back Russia's incursion, saw lower profit margins compared with the same quarter a year ago.

The company maintained its 2022 revenue guidance of $65.25 billion despite lingering supply chain related headwinds.

In July, Lockheed revised the figure down from $66 billion.

In an interview with Reuters, Malave said that next year "in spite of sales and margin pressure, we believe that we can still deliver the same absolute free cash flow that we had talked about last year, and had guided, so that's about $6.1 billion."

That, coupled with a fresh $14 billion multi-year share repurchase authorization plan adopted on Monday, means Malave expects earnings per share to increase in 2023.

The Bethesda, Maryland-based company posted $6.71 in earnings per diluted share for the quarter, versus analysts' estimates of $6.67, according to Refinitiv data.

Still, pandemic-related supply chain challenges have continued, Malave said. Lockheed's largest unit, aeronautics, which also makes the F-16 jet, was hit by difficulties obtaining key components in the first part of the year, hampering production volume.

Compared to the same quarter a year ago sales at aeronautics, which makes the F-35, rose 7.6% to $7.1 billion. Profit margins in the unit fell slightly from 10.9% to 10.7% compared with the same quarter last year.

The F-35 has had several recent successes in jet fighter competitions, including Finland, Switzerland and Germany. Potential customers include Greece and the Czech Republic.

Sales at the Missiles and Fire Control unit, which makes HIMARS launchers, were up 1.8% to $2.83 billion, but profit margins fell slightly compared with the same quarter a year ago.

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Malave said Lockheed has not been in discussions about the Defense Production Act, an emergency authority the U.S. government can use to direct arms production, to speed up weapons deliveries to Ukraine.

And despite recent turbulence between the U.S. and Saudi Arabia over a cut to oil production, Malave said Lockheed had not been asked to alter deliveries to the Kingdom of Saudi Arabia.