Lockheed Martin Reports Double-Digit Space Sales Growth in Q4 2019
Lockheed Martin reported its Fourth Quarter (Q4) 2019 financial results Tuesday, in which it saw a 14% net sales increase in its Space segment, compared to the same period in 2018. In addition, Space’s net sales in 2019 increased $1.1 billion, or 11%, compared to 2018. The company overall also saw a double-digit increase in net sales in 2019 compared to 2018, with an 11% increase.
Space’s net sales increased $349 million, or 14%, in the fourth quarter of 2019 compared to the same period in 2018. Higher net sales in strategic and missile defense programs and government satellite programs drove the fourth quarter increase. Lockheed Martin’s strategic and missile defense programs had a higher net sales of approximately $190 million due to higher volume, primarily of new hypersonic development programs. And, the company’s government satellite program had higher net sales of about $160 million due to higher volume, primarily of Next Generation Overhead Persistent Infrared (Next Gen OPIR), Global Positioning System (GPS) III, and government satellite services.
Some of Lockheed Martin’s gains were offset by lower equity earnings at United Launch Alliance (ULA), its joint-venture launch service with Boeing, the report stated.
Speaking on Lockheed Martin’s earnings call on Tuesday, Chairman, President and CEO Marillyn Hewson highlighted the Space segment’s $3.3 billion contract with the U.S. Air Force for combined orbital operations, logistics and resiliency support services as a significant business achievement in 2019. The single award, indefinite-delivery/indefinite-quantity contract, which was announced in November 2019, supports services on several military communications satellite constellations.
“These satellites provide nuclear-hardened, anti-jam, global communications to the White House, the State Department and military users, supporting the nation’s nuclear command and control system. And we are proud to be able to support the ongoing mission of this critical element of our national security,” Hewson said.
Space’s operating profit in the fourth quarter of 2019 increased $36 million, or 16%, compared to the same period in 2018, due to higher risk retirements. In addition, Space’s operating profit in 2019 increased $136 million, or 13%, compared to 2018. Operating profit increased approximately $125 million for government satellite programs due to higher risk retirements and higher volume; and about $45 million for commercial satellite programs. These increases came despite a decrease of approximately $65 million due to lower equity earnings for ULA.
Space’s total equity earnings, primarily ULA, had double-digit declines in both the fourth quarter of 2019 and the whole year, compared to the same time periods in 2018. In the fourth quarter of 2019, Space’s total equity earnings represented approximately $5 million, or 2% of the business segment’s operating profit, a decline of about 83% compared to the $30 million of total equity earnings during the same period in 2018. For the year that ended Dec. 31, 2019, Space’s total equity earnings represented approximately $145 million, or 12 percent, of the segment’s operating profit — a decline of 31% compared to the $210 million of total equity earnings in 2018.
Overall, Lockheed Martin Corporation reported fourth quarter 2019 net sales of $15.9 billion, compared to $14.4 billion in the fourth quarter of 2018. Net sales in 2019 was $59.8 billion, compared to $53.8 billion in 2018.
“2019 was an extraordinary year across the corporation with our team achieving record results in sales, earnings, EPS, cash from operations and backlog,” Hewson said in the earnings call. “The strength of our portfolio has us well-positioned to continue delivering mission success for our customers and outstanding value to our stockholders.”
Lockheed Martin stock closed at $437.17 on Tuesday, up $4.69 from the previous day’s close, for a gain of 1.08%.