Author: Jane Edwards|| Date Published: June 5, 2023
A new McAleese & Associates report estimates most defense prime contractors recorded a 3 percent growth in sales during the first quarter of 2023, indicating that labor availability is improving and supply chain deliveries are starting to stabilize.
Most defense contractors reported a 2 percent to 3 percent drop in sector profit and lower sector operating margin during the first quarter due to program execution challenges, according to the report.
To account for potential inflation, defense primes are raising their 2024 unit price projections in production lots that are being negotiated on an annual basis. Such increases can now be seen in aircraft production, shipbuilding and missile production.
McAleese noted that prime contractors are projecting to record free cash flow of about $23.1 billion in 2023 and intend to return $20.7 billion of that cash back to investors in the form of share repurchases and dividends.
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