Defense giant Lockheed Martin reported Q2 results early Tuesday. Meanwhile, the Senate debates its defense spending plan for 2024 this week after the House passed a hotly contested version of the budget on Friday. Lockheed Martin and other defense stocks faded Tuesday after rising in the morning.
The maker of the F-22 and F-35 fighter jets has been a heavy supplier of missiles and other military equipment in Ukraine's fight against Russia's invasion. Lockheed Martin's equipment is coming into focus again.
The U.S. will now allow European allies to train Ukrainians on the Lockheed and General Dynamics F-16 fighter jet, a member from President Joe Biden's administration announced Sunday. The Pentagon previously resisted Ukraine President Volodymyr Zelenskyy's requests for F-16s in order to avoid direct conflict with Russia.
The defense contractor provided High Mobility Artillery Rocket Systems (HMARS) and ammunition, Javelin and Stinger missiles early in the assault.
In early July, Lockheed Martin reached a $3 billion deal with the Israel Ministry of Defense to supply Israel Defense Forces with a third squadron of F-35 stealth aircraft. The Ministry of Defense will purchase 25 F-35 jets from the U.S. government to expand the Israeli Air Force stealth fleet to 75 aircraft.
Lockheed Martin Earnings
Lockheed's adjusted earnings rose 6.5% to $6.73 per share Tuesday while net sales climbed 8% to $16.69 billion for the quarter.
Analysts expected Lockheed Martin adjusted earnings to tick up 1.7% to $6.45 per share on a 3% revenue increase to $15.92 billion.
The defense contractor's aeronautics segment drove sales growth, recording a 17% year-over-year jump to $6.88 billion. The space business saw sales spike 12% to $3.17 billion. Missile and fire control sales were flat vs. 2022 while rotary and mission systems sales dipped 3%.
Lockheed's backlog rose 5.3% to a record $158 billion compared to the quarter ending Dec. 31, led by an 18% jump in missiles and fire control orders.
For fiscal 2023, Lockheed Martin raised its outlook following results. It guided earnings between $27 to $27.20 per share on $66.25 billion to $66.75 billion in revenue. The company previously predicted earnings range from $26.60 to $26.90 per share on $65 billion to $66 billion in sales.
Lockheed maintained its free cash flow guidance, expecting it to be greater than or equal to $6.2 billion for the year.
Lockheed Martin averaged 4% earnings growth over the past three quarters while revenue rose an average 3.7% during that time.
Senate To Debate Defense Spending
After a pitched battle, the $886 billion National Defense Authorization Act (NDAA) narrowly passed the House of Representatives along party lines in a 219-210 vote Friday. Four Republicans opposed the bill while four Democrats supported it.
The NDAA included a 5.2% pay raise for military members, initiatives to counter China and an additional $300 million for support to Ukraine. The spending plan also increases investments in fifth and sixth generation aircraft such as the F-35.
It also contained measures to block Pentagon policies that reimburse travel costs for troops seeking abortion, ends coverage of hormone treatment and transition surgeries for transgender troops, slashes diversity and inclusion programs, and limits specific flags that can fly at military installations.
Is LMT Stock A Buy Right Now? Here's What Lockheed Martin Earnings, Chart Show
The Democrat-controlled Senate debates its version of defense spending starting Tuesday. The Senate is broadly expected to reject the conservative social stipulations included by House Republicans.
"We defeated those measures in the Senate version of the defense bill," Sen. Kirsten Gillibrand (D-N.Y.), member of the Senate Arms Services Committee, said after the House passed the NDAA, the Washington Post reported.
So far, senators proposed more than 800 amendments to the bill with more likely this week, according to reports. The Senate aims to pass its version of the NDAA later this month. The two chambers will attempt to negotiate a compromise later this year.
Meanwhile, Sen. Tommy Tuberville (R-Ala.) has held up promotions for the Pentagon's top brass to force a change to the medical travel reimbursement policy. Sen. Tuberville stalled more than 270 nominations over the past months and has been chastised from both sides of the aisle for the move. Notably, the roll of Marine Commandant, the highest-ranking officer in the U.S. Marine Corps and member of the Joint Chiefs of Staff, is unfilled for the first time since the Civil War.
Lockheed Martin Stock
LMT stock eased 2.9% Tuesday to 456.36 and rose 1% premarket following results. Shares added 1.4% to 470.83 Monday leading up to the report. Lockheed Martin stock is trading in a flat base with a 508.10 buy point according to MarketSmith. Shares slid 6.2% so far this year.
Other defense contractors, including Northrop Grumman and Raytheon also pared their early morning gains.
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