Defense contractor Lockheed Martin Corp. (LMT: Quote) Tuesday said profit in the first quarter increased from last year, and revenue, despite declining, topped Wall Street estimates. The company backed its full year earnings outlook, while adjusting the revenue forecast to account for the impact of automatic budget cuts, called sequestration, that took effect on March 1. The stock is gaining over 2 percent in pre-market activity.
Net earnings increased to $761 million from $668 million. Earnings per share improved to $2.33 from $2.03. Latest quarterly results included a non-cash pension adjustment that erased net earnings by $0.23 per share and a special charge that reduced net earnings by $0.06 per share.
On average, 19 analysts polled by Thomson Reuters expected earnings of $2.04 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales dropped to $11.07 billion from $11.29 billion in the prior year. Analysts expected revenues of $10.31 billion.
Aeronautics net sales decreased 14 percent to $3.186 billion, partly due to lower net sales from F-16 programs due to fewer aircraft deliveries.
Information Systems & Global Solutions or IS&GS generated $2.106 billion in the quarter, up 1 percent from last year.
Missiles and Fire Control or MFC climbed 13 percent to $1.988 billion as a result of increased volume from tactical missile programs and fire control systems programs.
Mission Systems and Training were nearly flat with last year at $1.83 billion while Space Systems sales rose 4 percent to $1.96 billion.
Looking ahead to the year, the company affirmed its earnings per share forecast of $8.80 to $9.10 per share, but said it now sees net sales at the low end of the previous projection of $44.5 billion to $46 billion. Analysts expect earnings of $8.92 per share on revenues of $45.12 billion.
The revenue revision comes as a result of the potential sequestration estimate that would reduce 2013 net sales by around $825 million.
Lockheed Martin Chief Executive Officer and President Marillyn Hewson said, "While the impact of sequestration on our business has been limited to date, we continue to work closely with our customers to better understand the future impact sequestration may have on our programs."
Meanwhile, reports quoting Chief Financial Officer Bruce Tanner indicated that the budget cuts would have a bigger impact on the company's results in the second and third quarters.
LMT, which closed at $95.85 on Monday, is adding 5.4 percent in pre-market activity.
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by RTT Staff Writer
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