This summary is based on the second quarter fiscal 2008 earnings call conducted by Lockheed Martin Corporation (LMT) on July 22, 2008.
Management:
VP, IR: Jerry F. Kircher, III
EVP and CFO: Bruce L. Tanner
Key Investors Issues
- EPS were $2.15 per share compared to $1.82 per share last year.
- Net earnings were $882 million compared to $778 million in 2007.
- Net sales were $11 billion, a 4% increase over second quarter 2007 sales of $10.7 billion.
Second Quarter Highlights
Net earnings were $882 million ($2.15 per share), compared to $778 million ($1.82 per share) in 2007.
- Net sales were $11 billion, a 4% increase over second quarter 2007 sales of $10.7 billion.
- Cash from operations was $1.5 billion, compared to $1.4 billion in 2007.
The increase in the corporation''s projected 2008 net sales results from the acquisition of the Eagle Group during the second quarter.
The increase in the corporation''s projected 2008 earnings per share results primarily from:
- higher projected segment operating profit due to improved performance from Aeronautics, Electronic Systems, and Information Systems & Global Services;
- Earnings of 14 cents per share recognized on an unusual item in the second quarter;
- A decrease in interest expense as a result of the scheduled redemption on August 15, 2008 of the corporation''s $1 billion floating rate convertible debentures as announced on June 26, 2008.
The corporation continued to execute its balanced cash deployment strategy during the second quarter as follows:
- Repurchased 7.3 million shares at a cost of $770 million.
- Made capital expenditures of $170 million.
- Paid cash dividends of $168 million.
- Repaid $103 million of long-term debt.
- Invested $77 million for acquisition and investment activities.
Net sales for Aeronautics decreased by 8%.
Decreases in Combat Aircraft sales more than offset increases in Air Mobility and Other Aeronautics Programs. The decrease in Combat Aircraft was due primarily to lower volume on F-16 programs.
The increase in Air Mobility was due primarily to higher volume on C-130J programs, including deliveries and support activities.
There were three C-130J deliveries compared to three in the comparable period of 2007. The increase in Other Aeronautics Programs was due mainly to higher volume in sustainment services activities.
Operating profit decreased by 3%.
Operating profit decreases in Combat Aircraft and Air Mobility offset an increase in Other Aeronautics Programs.
In Combat Aircraft, the decline was due mainly to lower volume on F-16 programs.
The decrease in operating profit at Air Mobility was attributable primarily to performance on C-5 programs offset partially by improved performance on C-130 programs.
The increase in Other Aeronautics Programs was due mainly to higher volume and improved performance in sustainment services activities.
Net sales for Electronic Systems increased by 6%.
Sales increased due mainly to higher volume in fire control and tactical missile programs at Missiles & Fire Control (M&FC) and undersea systems, surface systems, and radar systems activities at Maritime Systems & Sensors (MS2). These increases were offset partially in both periods by declines in platform integration activities at Platform, Training & Energy (PT&E).
Operating profit for Electronic Systems increased by 6%. The increases in operating profit were attributable primarily to higher volume and improved performance in tactical missile and fire control programs at M&FC and radar systems at MS2. These increases were offset partially by declines in operating profit at PT&E due mainly to performance in the second quarter on platform integration programs.
Net sales for IS&GS increased by 13%.
Sales increased in all three lines of business. The increase in Global Services was due principally to global and mission services activities. The increase in Mission Solutions was driven primarily by mission and combat support solutions activities and global security solutions programs. The increase in Information Systems was due to higher volume on information technology programs.
Operating profit for IS&GS increased by 18%. The increase in operating profit was driven by Information Systems and Mission Solutions. The increase in Information Systems was due to higher volume on IT programs and a benefit from a contract restructuring during the first quarter of 2008. Mission Solutions operating profit grew due to higher volume and improved performance on secure enterprise solutions and mission and combat support solutions activities.
Net sales for Space Systems increased by 6%.
Sales growth in Space Transportation was offset partially by a decline in Satellites. The sales growth in Space Transportation was due primarily to higher volume on the Orion program. In Satellites, reduced volume in government satellite activities was offset partially by an increase in commercial satellite activities. There was one commercial satellite delivery.
Operating profit increased by 25%. The increase in operating profit was due to growth in Space Transportation and Satellites. In Space Transportation, the increase was attributable mainly to higher equity earnings on the United Launch Alliance joint venture, volume on the Orion program and the results from successful negotiations of a terminated commercial launch service contract in the first quarter of 2008. In Satellites, the increase was attributable mainly to higher volume and improved performance on commercial satellite activities.
