Zacks Analyst Blog Highlights: Lockheed Martin, AmerisourceBergen, PACCAR, Valero Energy and Office Depot - Press Releases

For Immediate Release

Chicago, IL – July 28, 2010 – Zacks.com Analyst Blog features: Lockheed Martin Corporation (LMD), AmerisourceBergen Corporation (ABC), PACCAR Inc. (PCAR), Valero Energy Corporation (VLO) and Office Depot Inc. (ODP ).

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Here are highlights from Tuesday’s Analyst Blog:

Lockheed Topples Estimates

Before markets opened today, Lockheed Martin Corporation (LMD)reported strong second quarter fiscal 2010 results sailing past the Zacks Consensus estimate of $1.78. On a reported basis with an EPS of $2.22, the company topped the year-ago quarterly earnings of $1.88. Excluding discontinued operations and a tax benefit related to the recognition of a deferred tax asset, EPS was $1.96 compared to $1.87 in the year-ago period.

Operating Statistics

A different picture was on the revenue front, where Lockheed Martin reported quarterly net sales of $11.4 billion, lagging behind the Zacks Consensus estimate of $11.5 billion by $76 million. However, the company smoothly sailed past the year-ago quarterly revenue of $11.1 billion by $370 million.

Earnings from continuing operations were $727 million compared to $731 million in the year-ago quarter. However, after including earnings of Pacific Architects and Engineers Inc. (PAE) a division the company plans to sell, net income came in at $825 million compared to $734 million in the year-ago quarter.

Lockheed Martin finished the second quarter of fiscal 2010 with $72.8 billion of backlog, of which $24.4 billion belonged to the Aeronautics segment and $21.9 billion to the Electronic Systems segment. However, total backlog fell 6.1% compared to fiscal-end 2009 backlog of $77.5 billion.

ABC Beats, Raises Outlook Again

Lockheed Martin Corporation (LMD) third quarter fiscal 2010 earnings (excluding a gain of 5 cents from special items) of 52 cents per share, surpassed the Zacks Consensus Estimate by 3 cents. Adjusted earnings increased approximately 24% from the year-ago period. The strong performance in the reported quarter was driven by strong sales of generic medicines and continued expense management.

Total revenues for the reported quarter climbed 6.6% year-over-year to $19.6 billion. Revenues for the quarter surpassed the Zacks Consensus Revenue Estimate of $19.0 billion. The strong showing was attributable to an 8% growth in AmerisourceBergen Drug Corporation revenues and a 3% rise in Specialty Group revenues.

The revenue growth at the AmerisourceBergen Drug Corporation segment was aided by market growth driven by its biggest customers. Meanwhile, generic revenues remained strong during the quarter.

Gross profit (excluding a $19.1 million gain from an antitrust litigation settlement) for the third quarter was $569.3 million, which reflected a 9.6% increase over the year-ago period. The improvement was driven by increased revenue coupled with the impact of generic pharmaceuticals.

Revenue growth, increased gross profit and expense management helped boost operating income by 32% to $281.9 million. However, 11% of the year-over-year increase was attributable to special items.

Outlook Raised

Following the strong third-quarter performance, AmerisourceBergen increased its guidance for fiscal 2010 for the third time this year. The company had earlier raised its guidance following strong first quarter and second quarter results.

AmerisourceBergen now expects fiscal 2010 earnings in the range of $2.16 – $2.20, up 28% to 30% from fiscal 2009. The company was previously expecting earnings per share in the range of $2.01 to $2.10. The company, which provides drug distribution and related services designed to reduce healthcare costs and improve patient outcomes, expects earnings to range between 44 cents and 48 cents per share in the fourth quarter of fiscal 2010.

The projection for revenue growth for 2010 has also been raised to 8 - 9% as opposed to the previous guidance of 7 - 8%. AmerisourceBergen continues to project fiscal 2010 free cash flow in the range of $525 million - $600 million.

PACCAR Profits More than Triple

Lockheed Martin Corporation (LMD) has reported a profit of $99.6 million or 27 cents per share in the second quarter of the year that more than tripled from $26.5 million or 7 cents per share in the prior-year quarter. With this, the truck maker has exceeded the Zacks Consensus Estimate of 20 cents per share for the quarter.

Revenues in the quarter surged 33% to $2.46 billion, up from the Zacks Consensus Estimate of $2.06 billion. The improved results were attributable to stronger truck sales around the world, especially with its DAF nameplates, as well as a rise in Financial Services profits.

Revenues in the Truck and Other segment shot up 39% to $2.22 billion due to increased freight tonnage, higher fleet utilization and increased maintenance for its aging trucks. The pre-tax profit in the segment improved significantly to $110.3 million from $7.4 million a year ago.

Despite a 3% decline in revenues to $239.3 million, pretax income in the PACCAR Financial Services (PFS) segment more than doubled to $34 million from $15.6 million in the second quarter of 2009.

The improvement in PFS results was attributable to a 10% fall in interest and other expenses to $162.6 million and an improvement of 31% in provision for credit losses to $20.2 million.

Valero Swings to Profit

Valero Energy Corporation (VLO) posted second-quarter earnings from continuing operations of 93 cents per share, significantly better than the Zacks Consensus Estimate of 71 cents and year-earlier loss of 36 cents. Total revenues for the quarter increased more than 25% year over year to $21.8 billion, compared with the Zacks Consensus Estimate of $20.2 billion.

The largest independent refiner and marketer moved into profit territory in the reported quarter on improving refining margins environment following four consecutive quarters of loss.

Capital Expenditure & Balance Sheet

Second-quarter capital spending totaled $517 million, of which $114 million was for turnarounds. For full year 2010, Valero expects its capital spending to be around $2.3 billion. At the end of the quarter, the company had cash and cash equivalents of approximately $2 billion.

Outlook

The company experienced improved refining margins on products and wider discounts on sour crude oils across all its regions and the second-quarter results once again proved the quality of its assets base. The company is consistently reviewing its refining portfolio, and upgrading the asset base by selling refinery assets that do not fit the business mix. We appreciate the company’s cost-saving initiatives that are running ahead of their schedules.

Office Depot Posts Narrower Loss

Office Depot Inc. (ODP ) recently posted improved second-quarter 2010 results. The quarterly loss of 7 cents a share portrayed a substantial improvement from a loss of 22 cents witnessed in the prior-year quarter, and also fared far better than the Zacks Consensus Estimate of a loss of 17 cents.

Despite a mid-single digit decline in the top-line, the office supplies retailer was able to narrow its bottom-line loss on the heels of cost containment. Cost of goods sold and occupancy costs fell 6.2%, store and warehouse operating and selling expenses tumbled 7.1%, whereas general and administrative expenses slipped 10.9% during the quarter.

The effective cost control helped deliver a gross profit growth of 0.3% to $766.7 million, whereas gross profit margin expanded 130 basis points to 28.4%. This reflects the fourth successive quarter of margin improvement.

Office Depot’s total revenue of $2,699.5 million missed the Zacks Consensus Revenue Estimate of $2,740 million, and dropped 4.4% from the prior-year quarter due to sluggish demand.

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