Lockheed, L3 report sales increases

January 29, 2019

By Marjorie Censer

Lockheed Martin said today sales in its most recent quarter reached $14.4 billion, up about 4 percent from the same three-month period a year earlier.

The contractor said its quarterly profit hit $1.3 billion, up from a loss the prior year of $744 million. Lockheed said the loss last year was the result of a one-time charge of $2 billion related to tax reform legislation.

For 2018, Lockheed recorded $53.8 billion in sales, up nearly 8 percent from 2017. Its profit for the year was $5 billion, up 57 percent from 2017.

All of the company's business units posted sales and profit boosts for the year.

Marillyn Hewson, Lockheed's chief executive officer, said during a call with analysts this morning that the recent partial government shutdown did not have a significant effect on the company.

"The vast majority of our business is currently funded," she said. However, Hewson said a future budget impasse could result in delays in awards and orders this year.

Meanwhile, L3 Technologies said today sales in its most recent quarter reached $2.8 billion, up 8 percent from the same period the prior year. For 2018, the company's sales hit $10.2 billion, up 7 percent from 2017.

L3's quarterly profit was $225 million, down 22 percent from the same three-month period a year earlier. However, the company's 2018 profit reached $1 billion, up 48 percent from the prior year.

L3 saw the highest rates of sales and profit growth during the quarter from its intelligence, surveillance and reconnaissance systems unit.

Chris Kubasik, L3's chief executive, said during a call with analysts today the company has taken steps to address problems in its traveling wave tube businesses.

L3 said today the unit had "lower manufacturing yields and unfavorable contract performance." The company took a $10 million inventory charge in the most recent quarter in connection with that business.

Kubasik told analysts the contractor has made personnel changes, among other improvements.

"We knew the risk was there. In all honesty, the  amount of it was higher than we expected," he said. "We've acknowledged it, we've taken the corrective actions and we're going to make sure it doesn't happen again in 2019."