Raytheon CEO Thomas Kennedy told investors last week his company is reviewing its options when it comes to teaming on the Air Force’s Ground-Based Strategic Deterrent, which is intended to replace the Minuteman III intercontinental ballistic missile as the ground-based leg of the nuclear triad.
“Right now, our strategy is we are engaging with multiple teams and seeing where our best solution is relative to being able to make one of these primes a winner,” he said Thursday on the company’s first-quarter earnings call.
Boeing, Lockheed Martin, and Northrop Grumman have all said they plan to compete as a prime contractor for the new ICBM. This year the Air Force is expected to downselect to two prime contractors on a risk reduction contract before selecting a single prime contractor in 2020, Kennedy said.
Raytheon’s first-quarter income increased 18 percent to $506 million, $1.74 earnings per share (EPS), versus $428 million ($1.43 EPS) a year previously. Excluding discontinued operations, per share earnings were $1.73, 12 cents better than consensus estimates. Total operating margins were 12.4 percent, 1.8 percent higher than a year earlier.
Sales increased 3 percent to $6 billion from $5.8 billion a year earlier.
Raytheon attributed most of the income gains to operational improvements, with a lower share count, accounting adjustments and other factors making up the remainder of the increase. At the operating level, the Integrated Defense Systems (IDS), Space and Airborne Systems (SAS), and Missile Systems all posted double-digit increases in segment profit while the Intelligence, Information and Services (IIS) segment posted a strong single-digit rise.
The SAS, IDS and Missile Systems segments drove the top line growth on sales of an electronic warfare system, and an international early warning radar program.
The GBSD is expected to be deployed in the late 2020s, with a service life that will extend through 2075. Congress has authorized $114 million for the program for fiscal 2017 and plans to spend over $3 billion on early development activities from fiscal 2017 to 2021.
