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Lockheed Boosts Full-Year Guidance on 2Q Earnings, Revenue Beats

F35C launch on USS NimitzLockheed Martin (NYSE: LMT) lifted full-year earnings and revenue guidance Tuesday and exceeded analysts’ second quarter estimates for both figures on sales from the Sikorsky helicopter business acquired in November as negotiations between the company and U.S. government continue on the next two F-35 fighter jet batches.

Bethesda, Maryland-based Lockheed said it now expects 2016 earnings in the $12.15-to-$12.45 per share range versus the previous $11.50-to-$11.80 outlook, with revenue at $50 billion-to-$51.5 billion compared to the prior $49.6 billion-to-$51.1 billion.

An increase in F-35 production and sustainment activities also helped boost second quarter sales and full-year guidance,  Lockheed said.

These results from the world’s largest defense contractor start second quarter earnings season for companies listed in Executive Mosaic’s GovCon Index of 30 government contractor stocks, which include the U.S.’ top five primes that investors use to gauge the defense industrial base’s financial health.

Boeing (NYSE: BA), General Dynamics (NYSE: GD), Northrop Grumman (NYSE: NOC) and Raytheon (NYSE: RTN) are scheduled to release second quarter results next week.

Lockheed’s second quarter earnings came in at $3.32 per share to exceed analysts’ expectations by 39 cents and revenue increased 10.91 percent from the same period last year to $12.91 billion, which tops the consensus Wall Street forecast of $12.56 billion.

The company reported $1.02 billion in net profit for the April-June period to register a 9.9-percent year-over-year increase and second quarter free cash flow of $1.24 billion with 81 percent returned to shareholders via dividends and stock repurchases.

Sikorsky contributed $1.2 billion in additional revenue for the second quarter and the company reiterated its expectations to complete the separation and eventual merger of its information systems and global solutions business into Leidos Holdings (NYSE: LDOS) during the third quarter.

Lockheed included its full-year IS&GS outlook into guidance and says it will adjust the forecast when the deal with Leidos completes.

The company also said it is negotiating final terms with the Defense Department on a contract for the next two lots — nine and 10 — of the F-35 aircraft as the Air Force intends to declare initial operating capability for the jet by the end of this year.

Lockheed reported $900 million of cash exposure and $3 billion in termination-liability exposure related to that F-35 contract the company expects to receive additional funds by year end.

As of Monday’s close, shares in Lockheed have climbed 18.34 percent since the year started and risen 27.12 percent over 12 months.

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