Lockheed Martin Clocks Mixed Q2 Earnings, Issues Better Than Expected FY21 EPS Guidance

Lockheed Martin Corporation LMT reported second-quarter net sales growth of 5% year-over-year to $17.03 billion, beating the consensus of $16.93 billion.

• EPS improved by 12.6% Y/Y to $6.52, narrowly missing the estimate of $6.53.
• Net earnings reported include a loss of $225 million ($169 million, or $0.61 per share, after-tax), recorded at Aeronautics, related to performance issues experienced on a classified program.
• Sales by segments: Aeronautics $6.67 billion (+3% Y/Y), Missiles and Fire Control $2.94 billion (+5% Y/Y), Rotary and Mission Systems $4.34 billion (+5% Y/Y), and Space $3.18 billion (+10% Y/Y).
• The operating profit increased by 5.1% Y/Y to $2.19 billion, and the margin was flat at 12.9%.
• Total business segment operating margin contracted by 60 bps to 10.4%.
• Lockheed Martin generated cash from the operation of $1.27 billion during the quarter, compared to $2.18 billion a year ago.
• Quarterly cash activities: capital expenditures of $318 million (vs. $343 million in 2Q20), paid cash dividends of $721 million (vs. $671 million in 2Q20), repurchased 1.3 million shares for $500 million under an accelerated share repurchase agreement.
• As of June 27, 2021, the total backlog was $141.66 billion, compared to $147.13 billion on December 31, 2020.
• FY21 Outlook: The company expects net sales of $67.3 billion - $68.7 billion versus $68.34 billion consensus, EPS of $26.70 - $27.00 (up from prior guidance of $26.40 - $26.70) versus $26.68 consensus.
• It expects business segment operating profit of $7.38 billion - $7.52 billion, operating cash flow of ~$8.9 billion.
• Price action: LMT shares are trading lower by 1.32% at $375.74 in the premarket session on the last check Monday.
• Photo by Rob Shenk via Wikimedia