Lockheed Martin Corp. on Tuesday raised its full-year sales and profit guidance as the Pentagon accelerated defense contract awards and pledged to cover the industry's increased costs during the coronavirus pandemic.
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The world's biggest defense company by sales boosted its order backlog above $150 billion and overcame supply chain disruptions to report forecast-beating quarterly profits as it continued to ship F-35 combat jets, Sikorsky helicopters and missile defense systems.
Defense contractors continued to operate relatively unscathed through the stay-at-home orders due to the pandemic after being deemed essential businesses, with the Pentagon pledging to cover additional costs estimated to top $10 billion.
Lockheed Martin shares rose more than 3% in premarket trading. Other defense companies also climbed.
Lockheed Martin is estimated by analysts to have incurred $2.5 billion in additional pandemic-related costs, and said it assumed these would be recovered as it forecast per-share earnings this year to rise to between $23.75 and $24.05, compared with its previous forecast of $23.65 to $23.95.
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The 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 free cash flow guidance.
The Pentagon has accelerated some big contract awards to defense contractors, which have in turn flowed liquidity through their supply chain to keep component makers afloat through the pandemic. Lockheed Martin has also continued to hire staff.
Net profit rose to $1.63 billion in the June quarter from $1.42 billion a year earlier, and per-share earnings after one-off 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.