Lockheed Martin on Tuesday reported solid first-quarter financial results with strong sales and cash flow, but flat earnings, results it said were not impacted by the COVID-19 pandemic.
But the outlook for the rest of the year is “uncertain” and is dependent in part on the “duration and spread” of the crisis, and the resulting actions by the federal, state, local and international governments, the company said. The pandemic has disrupted supply chains and financial markets, and restricted travel and transport, all signs of significant impacts on the U.S. and global economy, it said.
Sales in the quarter increased 9% to $15.7 billion from $14.3 billion a year ago, while net income was level at $1.7 billion. The company’s per-share earnings were up slightly to $6.08 in the quarter, versus $5.99 a year ago due to a lower share count. The figure easily topped the consensus estimate of $5.81.
Higher taxes in the quarter pressured net income. The company’s operating margin slid 2.3% to 13.6%. Free cash flow was a strong $2 billion.
The sales outlook for 2020 was trimmed less than a percent due to expected COVID-19 impacts “as production and supply chain activities have recently slowed in the Aeronautics business area,” the company said. Sales are now forecast to be between $62.3 billion and $64 billion versus the prior outlook of between $62.8 billion and $64.3 billion.
Guidance for segment operating profit, per share earnings, pension adjustments, and cash flow remain intact, but Lockheed Martin cautioned that the road ahead is unclear.
“The corporation’s 2020 outlook assumes, among other things, that its production facilities continue to operate and it does not experience significant work stoppages or closures, it’s is able to mitigate any supply chain disruptions and these do not worsen, and it is able to recover its costs under contracts and government funding priorities do not change,” the company said.
Last week, the Air Force announced that Lockheed had not been selected as the prime to build the service’s next-generation nuclear cruise missile. The work instead will go to Raytheon.
