Bethesda, Md. – Lockheed Martin Corp., the largest U.S. defense contractor, said today fourth-quarter net income grew 53 percent, boosted by one-time gains and higher sales of information technology services and space systems.
The Bethesda-based company also said it boosted its earnings guidance for 2006. Its stock rose $2.47, or 3.8 percent, to $67.48 in early trading on the New York Stock Exchange.
Lockheed Martin’s Space Systems unit is based in Jefferson County, Colo., with about 5,500 employees. It manufactures rockets, NASA and government spy satellites, and ground-based systems, including tracking systems.
Lockheed said profit was $568 million, or $1.29 per diluted share, compared to $372 million, or 83 cents per share, in the year-ago period.
Results in the latest quarter reflect a gain of $55 million, or 13 cents per share, from the October sale of about 16 million shares of satellite operator Inmarsat, as well as a gain of $19 million, or 4 cents per share, from the sale of the company’s investment in telecom NeuStar Inc. The 2004 fourth quarter included one-time charges that reduced earnings by $10 million, or 2 cents per share.
Analysts polled by Thomson Financial, on average, were looking for earnings of $1.15 per share.
Net sales were $10.23 billion, a 3 percent rise from $9.97 billion in the year-earlier quarter, but just under Wall Street’s consensus estimate of $10.35 billion.
For 2005, Lockheed reported net income of $1.83 billion, or $4.10 per share, compared with $1.27 billion, or $2.83 per share, in 2004. Sales were $37.21 billion, up from $35.53 billion in the previous year.
The company had the largest growth in its information technology and space systems units, which helped offset nearly flat sales in the aeronautics division that makes the fighter jets and transport planes Lockheed is perhaps best known for.
Sales in the systems and IT group rose 3 percent to $5.3 billion while space systems sales also grew 3 percent to $1.8 billion.
Aeronautics sales were up only one percent to $3.04 billion, dampened by a $480 million drop in sales combat planes that include F-16 jets. The company announced plans to scale back its F-16 work force in Fort Worth, Texas, during the quarter, which could affect about 300 jobs.
The combat aircraft drop was expected, according to company Chief Financial Officer Christopher Kubasik, as the F-16 program slows while newer fighter planes, such as the F/A-22 and F-35 are still in early stages of production.
“We’ve seen that coming for several years with the ramp down of the F-16 program,” Kubasik said in an interview.
Looking ahead, Lockheed projects 2006 earnings of $4.50 to $4.75 per share, up from its previous guidance provided in October of $4 to $4.25 per share. Wall Street is expecting a profit of $4.26 per share.
The company said the increased outlook is driven by improved operational performance in its aeronautics segment, a reduction in its pension expense adjustment, unusual gains from the January sale of Inmarsat stock and assets of Space Imaging LLC. It also is reducing the number of its shares outstanding in continued share repurchase activity.
The company reiterated its guidance for 2006 sales of $38 billion to $39.5 billion. The consensus analyst estimate for sales is $39.30 billion.
Lockheed is still waiting to hear from federal regulators about a proposed joint rocket launch venture with rival Boeing Co. An answer was expected last year, but the approval of the deal has been postponed several times.
Lockheed also suffered a blow earlier this month when the Army canceled a spy plane contract that could have eventually been worth $8 billion. Lockheed struggled to meet the military’s weight requirements for the plane, a major factor in the Army’s decision to end the contract. The Army said it plans to try again with the plane, but Kubasik said it was too early to say whether Lockheed would bid again on the project.
