Meantime, Hewson was asked about scenarios in 2018 given the murkiness of federal spending and said Lockheed — maker the F-35 advanced stealth fighter jet — still has “a number of programs” that remain “well supported” by both the House and Senate versions of the NDAA.
“Even with the CR, we are not going to see an immediate impact,” she insisted. “What it affects is if it extends in the next year,” although the executive added she’s “actually feeling optimistic that it’s not going to do that.”
As Hewson sees it, Lockheed also has a growing international business so it’s not entirely dependent on Pentagon contracts.
Earlier this month, the U.S. approved a $15 billion deal for Lockheed Martin to sell its THAAD missile defense shield system to Saudi Arabia. The same missile launch system, known as Terminal High Altitude Area Defense, is being utilized in South Korea to defend against the missile threat from nuclear-armed North Korea.
Last year, about 27 percent of Lockheed’s sales were to international customers. “We are not totally reliant on the U.S. government budget for our growth going forward,” she said.
The Lockheed executive added that the Bethesda, Maryland-based company’s defense portfolio remains strong and it is “continuing to win business.”
In July, the Pentagon announced a $5.6 billion order for the eleventh batch of the advanced fighter aircraft. The F-35 Joint Strike Fighter has made Lockheed’s Aeronautics segment its largest segment in revenue.
In the third quarter, the Aeronautics segment posted revenue of $4.7 billion, an increase of $583 million, or 14 percent, compared with a year ago. The company said the rise was primarily due to higher net sales of about $540 million for the F-35 program.
Lockheed has previously said it expects international orders for the F-35 will reach about 50 percent of all the fighter jet’s orders in the next five years. Besides selling to the U.S. military, the fifth-generation fighter has customers from nine other countries.
“We have just won in the past quarter and of course the F-35 continues to grow and be well supported,” said Hewson. “I feel pretty bullish about our portfolio and where we are going even if we were to face additional budget caps.”
Overall, Lockheed’s financial results for the third quarter were a miss in terms of total revenue and earnings per share. The company also produced a preliminary forecast for 2018 that some viewed as mediocre.
On the earnings miss, Lockheed’s stock closed down more than 2 percent Tuesday. The stock remains up about 25 percent this year.
EPS from continuing operations in the third quarter came in at $3.24 per share, below Street consensus of $3.26, according to Thomson Reuters. Total revenue was $12.2 billion, up 5 percent from a year ago but fell short of the $12.81 billion projected by industry analysts.
As for the outlook for 2018, Lockheed sees sales growth of about 2 percent but that’s at the lower end of Street estimates.
