LMT Lockheed Martin Corp

By Doug Cameron 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 22, 2020).

Lockheed Martin Corp. said rising Covid-19 cases are affecting production of its combat jets and missiles in Texas and Florida, impacting an industry that had mostly dodged the financial fallout from the pandemic.

The world's biggest defense company by sales on Tuesday cut its expected deliveries of F-35 aircraft produced in Fort Worth, Texas, by 15% for this year. It also flagged delays in shipments of Hellfire missiles made in Orlando, Fla., because of supply-chain issues as more workers tested positive and others were sent home as a precaution.

The defense industry has been one of the U.S. economy's most-resilient sectors, with its designation as an essential industry allowing plants to avoid shelter-in-place orders. The Pentagon also has accelerated contract payments to help the sector's smaller suppliers.

Despite the production bumps in Texas and Florida, Lockheed Martin said it doesn't expect the pandemic to have a material impact on its finances this year. The company raised its 2020 sales and profit guidance on Tuesday after reporting a forecast-beating quarterly earnings.

The Pentagon has pledged to cover contractors' additional costs from continuing work through the pandemic, and it is seeking more than $10 billion in funding that has yet to be authorized by Congress. The Pentagon's accelerated payments have helped push cash through the supply chain to keep component makers afloat through the pandemic. Lockheed Martin has also continued to hire staff.

Lockheed Martin is estimated by analysts to have incurred $2.5 billion in pandemic-related costs. The company said it assumed such costs would be recovered, as it forecast per-share earnings this year would rise to between $23.75 and $24.05, compared with its previous forecast of $23.65 to $23.95.

The company boosted its order backlog to a record $150 billion during the latest quarter, and Chief Executive Jim Taiclet said it is positioned to weather either a flat or declining defense budget.

Mr. Taiclet, who became CEO last month, said there could be a silver lining from any downturn in defense spending, saying in an interview that merger-and-acquisition opportunities could emerge in areas such as mission systems, as well as partnerships in the 5G network sector.

Lockheed Martin's second-quarter profit rose to $1.63 billion, from $1.42 billion a year earlier, and per-share earnings excluding one-time items climbed to $6.13, above the $5.72 consensus among analysts polled by FactSet. Sales rose to $16.2 billion from $14.4 billion.

The Bethesda, Md.-based company added $1 billion to the top end of its forecast for 2020 sales, which are now expected to be between $63.5 billion and $65 billion, and boosted its closely watched guidance for free cash flow.

Lockheed Martin shares rose 2.6%.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

July 22, 2020 02:47 ET (06:47 GMT)

Lockheed Martin (NYSE:LMT)
Historical Stock Chart
From Mar 2024 to Apr 2024

Lockheed Martin (NYSE:LMT)
Historical Stock Chart
From Apr 2023 to Apr 2024