Reading time ( words)
Lockheed Martin today reported second quarter 2016 net sales of $12.9 billion, compared to $11.6 billion in the second quarter of 2015. Net earnings in the second quarter of 2016 were $1.0 billion, or $3.32 per share, compared to $929 million, or $2.94 per share, in the second quarter of 2015. Cash from operations in the second quarter of 2016 was $1.5 billion, compared to $1.3 billion in the second quarter of 2015.
“The Corporation achieved exceptional operational and financial results in the second quarter,” said Lockheed Martin Chairman, President and CEO Marillyn Hewson. “Our strong performance enabled us to increase our financial guidance for sales, profit, earnings per share and cash from operations, and positions the company to deliver more value to our customers and shareholders.”
The Corporation may determine to fund customer programs itself pending government appropriations. If the Corporation incurs costs in excess of funds obligated on a contract, it may be at risk for reimbursement of the excess costs. In 2014 and 2015, the Corporation received customer authorization and initial funding to begin producing F-35 aircraft to be acquired under low-rate initial production (LRIP) 9 and 10 contracts, respectively. The Corporation continues to negotiate these contracts with its customer. Throughout the negotiation process, the Corporation has incurred costs in excess of funds obligated and has provided multiple notifications to its customer that current funding is insufficient to cover the production process. Despite not yet receiving additional funding, the Corporation continued work in an effort to meet the customer’s desired aircraft delivery dates. As a result, as of June 26, 2016, the Corporation has approximately $900 million of potential cash exposure and $3.0 billion in termination liability exposure related to the F-35 LRIP 9 and 10 contracts. The Corporation is currently negotiating final contract terms with its customer and expects to receive additional funding by the end of 2016.
CASH DEPLOYMENT ACTIVITIES
The Corporation’s cash deployment activities in the second quarter of 2016 consisted of the following:
- repurchasing 2.1 million shares for $501 million, compared to 4.9 million shares for $937 million in the second quarter of 2015;
- paying cash dividends of $501 million, compared to $467 million in the second quarter of 2015;
- repaying $452 million of long-term notes upon scheduled maturity, compared to no repayments in the second quarter of 2015; and
- making capital expenditures of $235 million, compared to $191 million in the second quarter of 2015.
About Lockheed Martin
Headquartered in Bethesda, Maryland, Lockheed Martin is a global security and aerospace company that employs approximately 125,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.