Lockheed exec: Surge in missile demand 'not an aberration'

By John Liang / April 24, 2018 at 4:57 PM

The 8 percent increase in Lockheed Martin's missile sales during the first quarter of 2018 compared to the same quarter the previous year is "not an aberration," according to a senior company executive.

"When I looked at the long-range plan, our three-year plan, the thing that sort of jumped off the page to me is [Lockheed's] Missiles and Fire Control [business unit] is amongst our highest-growth business areas over that three-year plan period and that was sort of under the original President's Budget without taking into consideration a number of things that fell out from the [fiscal year 2018] omnibus" spending bill, Bruce Tanner, Lockheed's chief financial officer, told Wall Street analysts during a conference call today.

Lockheed said its Missiles and Fire Control business unit's net sales in the first quarter of 2018 increased by $128 million, or 8 percent, compared to the same period the year before. "The increase was primarily attributable to higher net sales of approximately $70 million for increased volume on classified programs; and about $50 million for tactical missiles programs due to increased volume (primarily Long Range Stand Off (LRSO) missile and Joint Air-to-Surface Standoff Missile (JASSM)," the company's earnings statement reads.

Higher missile sales is a trend Tanner sees continuing: "I think in every single missile opportunity that we have and that's all the way from [Patriot Advanced Capability-3s] to [Terminal High Altitude Area Defense] to [Joint Air-to-Surface Standoff Missiles] to Hellfires to [Guided Multiple-Launch Rocket Systems], we are looking at increasing the capacity, increasing our build rate in every single one of those categories in the not-too-distant future, so I think what you're seeing is not an aberration and I would say it is going to, in my judgment, last longer than a short duration, five years or so, I think that's a possibility, definitely."

Overall, Lockheed Martin reported first-quarter 2018 net sales of $11.6 billion, compared to $11.2 billion in the first quarter of 2017. Net earnings in the first quarter of 2018 were $1.2 billion, compared to $789 million in the first quarter of 2017.

The strong results this past quarter have made Lockheed CEO Marillyn Hewson bullish for the rest of the year.

"I am very pleased that our strong year-to-date financial performance across all business areas and our expectations for the remainder of 2018 have enabled us to increase our full-year outlook for sales, operating profit and earnings per share," Hewson said during the April 24 call.