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Lockheed Martin Q4 Profit Misses View, Raytheon Tops; Both Issue Rosy Outlook

Lockheed Martin Q4 Profit Misses View, Raytheon Tops; Both Issue Rosy Outlook
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1/24/2013 8:47 AM ET

Defense contractors Lockheed Martin Corp. (LMT: Quote) and Raytheon Co. (RTN: Quote) reported a profit for the fourth quarter that declined from last year, with Lockheed Martin missing analysts' expectations, while smaller rival Raytheon topped it. However, quarterly revenues at both companies breezed past analysts' estimates. Looking ahead, Lockheed Martin and Raytheon provided earnings guidance for the full-year 2013, well above Street view.

Bethesda, Maryland-based Lockheed Martin reported net earnings of $569 million or $1.73 per share for the fourth quarter, lower than $683 million or $2.09 per share in the prior-year quarter. Net earnings from continuing operations for the quarter declined to $569 million or $1.73 per share from $698 million or $2.14 per share in the year-ago quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $1.82 per share. Analysts' estimates typically exclude special items.

Net sales in the quarter edged down 1 percent to $12.10 billion from $12.21 billion in the same quarter last year, and topped seventeen Wall Street analysts' consensus estimate of $11.16 billion. Barring information systems & global solutions and space systems, all other segments - aeronautics, missiles and fire control as well as mission systems and training - reported sales growth in the latest quarter.

Net sales for aeronautics grew 7 percent to $4.14 billion from last year, while information systems & global solutions net sales declined 14 percent year-over-year to $2.20 billion.

Missiles and fire control net sales increased 4 percent to $1.90 billion from a year ago, and mission systems and training net sales remained relatively flat with last year at $1.86 billion. Space systems net sales decreased 6 percent to $2 billion from last year.

Total operating profit for the quarter declined 4 percent to $1.06 billion from $1.11 billion in the year-ago quarter, with margins contracting 30 basis points to 8.8 percent from last year's 9.1 percent.

Backlog at the end of the fourth quarter was $82.30 billion, compared to $80.70 billion at the end of the year-ago quarter.

For fiscal 2012, net earnings from continuing operations was $2.75 billion or $8.36 per share, higher than $2.67 billion or $7.85 per share in the year ago. Net sales grew to $47.2 billion from $46.5 billion last year. Street was looking for full-year 2012 earnings of $8.42 per share, on annual revenues of $46.22 billion.

Looking ahead to fiscal 2013, the company expects earnings from continuing operations in a range of $8.80 to $9.10 per share, on projected net sales between $44.50 billion and $46.00 billion. Analysts currently expect the company to report earnings of $8.27 per share on revenues of $45.25 billion for the full-year 2013.

Waltham, Massachusetts-based Raytheon reported net earnings of $469 million, or $1.42 per share for the fourth quarter, lower than $543 million, or $1.57 per share in the prior-year quarter. Earnings from continuing operations declined to $466million or $1.41 per share from $539 million or $1.56 per share in the year-ago quarter.

Excluding items, adjusted earnings per share was $1.60, compared to last year's $1.72. On average, 19 analysts polled by Thomson Reuters expected the company to earn $1.31 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter edged up to $6.44 billion from $6.42 billion in the same quarter last year, and topped seventeen Wall Street analysts' consensus estimate of $6.41 billion.

Net sales for integrated defense systems grew 2 percent to $1.32 billion from last year, while intelligence and information systems net sales remained relatively flat with last year at $755 million.

Missile systems net sales increased 4 percent to $1.54 billion from a year ago, while network centric systems net sales remained relatively flat with last year at $1.13 billion. Space and airborne systems net sales increased 3 percent to $1.38 billion from last year, while technical services net sales declined 6 percent to $831 million from last year.

Operating margin for the quarter contracted 150 basis points to 11.7 percent from last year's 13.2 percent.

The company reported strong bookings of $7.89 billion for the quarter, resulting in a book-to-bill ratio of 1.23, compared to bookings of $7.15 billion in the year-ago quarter.

For fiscal 2012, net income from continuing operations was $1.89 billion or $5.65 per share, higher than $1.85 billion or $5.22 per share in the year ago. Excluding items, adjusted earnings per share was $6.21, compared to last year's $5.85. Net sales declined 1.5 percent to $24.41 billion from last year. Street was looking for full-year 2012 earnings of $5.55 per share, on annual revenues of $24.39 billion.

Looking ahead to fiscal 2013, the company expects adjusted earnings from continuing operations in a range of $5.65 to $5.80 per share, on projected net sales between $23.6 billion and $24.1 billion. Analysts currently expect earnings of $5.43 per share on revenues of $24.05 billion for the full-year 2013.

LMT closed Thursday's regular trading session at a 52-week high of $96.07, up $1.35 on a volume of 2.42 million shares. RTN closed at $58.20, up $0.41 on a volume of 2.07 million shares. In the past 52-week period, the stock has been trading in a range of $.50 to $59.34.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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