Lockheed Martin Corp., the Pentagon's largest contractor, reported a 22 percent jump in second-quarter profit yesterday on continued growth in its fighter jet and information technology businesses.
The Bethesda maker of the F-16 fighter and Atlas rocket reported net income of $296 million (66 cents a share) during the quarter compared with $242 million (54 cents) in the same period last year. Revenue jumped 14 percent, to $8.8 billion from $7.7 billion last year.
The growth was linked to "higher military spending as they [the military] gear up and get ready for the wars of the future," said Troy J. Lahr, a defense analyst with investment bank Legg Mason Inc.
Lockheed shares gained 20 cents to close at $52.40 a share on the New York Stock Exchange.
"We had an outstanding quarter, an outstanding six months, and we're very well positioned in this opportunity-rich environment," Christopher E. Kubasik, chief financial officer, said in an interview.
Company officials remained vague about acquisition plans after the collapse of a deal to buy Titan Corp., of San Diego last month. "We don't see any significant acquisitions at the forefront" but will continue to consider deals, Kubasik said.
Lockheed's largest unit, aeronautics, continued to be its fastest-growing and most profitable. The unit's revenue increased 31 percent, to $3.1 billion from $2.4 a year earlier. Its operating profit jumped 48 percent, to $239 million from $162 million.
Lockheed delivered 22 F-16 fighters to foreign customers in the quarter, compared with 12 in the same period last year. Development of the F-35 Joint Strike Fighter, which will not be ready until 2008, also boosted revenue, company officials said.
The information and technology services unit reported a 19 percent increase in revenue, to $917 million from $772 million, and a 39 percent increase in operating profit, to $71 million from $51 million. The unit received a boost from the recent acquisition of the government contracting unit of Affiliated Computer Systems Inc. and from contracts to provide information technology services to the Defense Civilian Personnel Data System and technical support to the Army Information Technology Agency.
The space unit reported flat revenue of $1.5 billion during the quarter, but its operating profit surged 28 percent, to $129 million from $101 million. The increase in profit was related to cost cutting, manufacturing efficiencies and downsizing in previous years, company officials said.
"We think the commercial satellite business really hit bottom in 2003; we expect to see a recovery," though not at the level expected during the 1990s telecommunications boom, Kubasik said. Thanks to changes at the unit, "we're getting more value and profit out of the business," he said.
Lockheed reported a $148 million non-cash pension expense during the quarter.