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Lockheed Martin Stock Falls on Third-Quarter Sales Miss

Lockheed Martin shares fall after reporting better-than-expected third-quarter earnings but sales that fall short of forecasts amid a decline in F-35 jet sales.

Lockheed Martin  (LMT) - Get Lockheed Martin Corporation (LMT) Report shares fell more than 8% on Tuesday after the company posted better-than-expected third-quarter earnings but sales that fell short of forecasts amid a drop in revenue in its crucial aeronautics division due to a decline in F-35 jet sales.

Lockheed Martin said earnings for the three months ending in June came in at $614 million, or $2.21 a share, vs. $1.7 billion, or $6.05 a share in the same period last year. Analysts polled by FactSet had been expecting per-share earnings of $1.97 a share.

Revenue totaled $16.03 billion, down from $16.45 billion a year ago and below analysts' forecasts of $17.1 billion in quarterly sales. Aeronautics division sales came in at $6.5 billion vs. $6.6 billion a year ago, while sales from missiles and fire control products and services totaled $2.7 billion vs. $2.9 billion in the third quarter of 2020.

Lockheed Martin said the drop in aeronautics sales "...was primarily attributable to lower net sales of approximately $220 million for the F-35 program due to lower volume on development contracts and lower volume and risk retirements on production contracts." 

The company added that the decrease "...was partially offset by an increase in sales of about $35 million for the F-16 program due to higher production volume that was partially offset by lower sustainment volume," as well as roughly $30 million for classified development contracts due to higher risk retirements.

Lockheed Martin delivered 36 F-35 fighter jets over the three months ending in September, and seven C-130J aircraft.

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The results included a non-cash after-tax pension settlement charge of $1.3 billion, or $4.72 a share, related to the purchase of group annuity contracts to transfer $4.9 billion of gross pension obligations and related plan assets to an insurance company.

They also included unrealized after-tax gains of $74 million, or 27 cents a share, due to increases in the fair value of investments held in the Lockheed Martin Ventures Fund.

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For the remainder of 2021, Lockheed Martin said it now sees sales of approximately $67 billion vs. previous guidance of sales of between $67.3 billion to $68.7 billion. Adjusted per-share earnings are now expected to be $27.17, slightly above previous guidance of between $26.70 and $27 a share.

At last check, Lockheed Martin shares were down 8.69% at $343.75.