Lockheed Martin Reports 10% Increase in Q1 Space Sales
Lockheed Martin saw about a 9.8% increase in net sales in the First Quarter (Q1) of 2020 compared to 2019, and said in its earnings report released Tuesday that the COVID-19 pandemic did not have a material impact on its operating results or business in Q1. Overall, the company reported net sales of $15.7 billion in Q1 of 2020, compared to $14.3 billion in the first quarter of 2019.
The company said that it is beginning to experience issues in each of its business areas related to COVID-19, primarily in access to some locations and delays of supplier deliveries. It updated its net sales projection in its 2020 financial outlook — projecting net sales between $62.25 billion to $64 billion, slightly adjusted from its January projection of $62.75 billion to $64.25 billion.
“The ultimate impact of COVID-19 on the corporation’s 2020 outlook for sales, segment operating profit, earnings and cash flows from operations remains uncertain,” Lockheed Martin’s Tuesday release said. The company has announced various steps it is taking to address the COVID-19 pandemic, including advancing a total of $156 million to its supply chain.
The Space segment in particular saw net sales increase 10% in Q1 of 2020 compared to the same period in 2019. Sales increased by $277 million to $2.9 billion. The company attributed the increase to higher net sales of approximately $180 million for strategic and missile defense programs due to higher volume and about $100 million for government satellite programs due to higher volume, primarily the Next Generation Overhead Persistent Infrared (Next Gen OPIR). This increase follows a strong previous quarter, in which Lockheed Martin reported a 14% net sales increase in Space in Q4 2019, compared to the same period in 2018.
However, Space’s operating profit in Q1 decreased $53 million, or 16%, to $281 million, compared to the same period in 2019. Part of that decrease was $35 million due to lower equity earnings from Lockheed Martin’s investment in United Launch Alliance (ULA).
Lockheed Martin Chairman, President, and CEO Marillyn Hewson said in a Tuesday earnings call with investors that the company is focused on its national security mission despite the pandemic.
“Our teams are successfully addressing many of the risks that have arisen due to the impacts. Our manufacturing facilities are open and our workforce is engaged. The situation will evolve and we will continue to monitor our business environment for areas of concern. The corporation remains committed to delivering the products and services needed for our customers and to maintaining a safe and healthy workplace for our employees,” Hewson said.