Lockheed expects flat sales in 2023, growth to return in 2024

Defense contractor Lockheed Martin doesn’t expect sales growth to return until 2024 due to lingering effects from the COVID-19 pandemic and supply chain problems, executives told investors on an earnings call Tuesday.

Until then, Lockheed chief executive Jim Taiclet said during the call, 2023 sales are likely to be essentially flat when compared to 2022.

In financial results released Tuesday, Lockheed reported nearly $16.6 billion in sales in the third quarter of 2022, up slightly from the $16 billion in sales over the same three-month period last year. Profits increased to nearly $1.8 billion in the third quarter, about triple the $614 million recorded a year earlier. Last year, pandemic-related supply chain woes dealt a significant blow to Lockheed’s aeronautics, space and missiles and fire control sectors, dragging down profit.

Year to date, the company’s sales are down almost 5%, from $49.3 billion in the first nine months of 2021 to nearly $47 billion in the same period in 2022.

Chief Financial Officer Jay Malave said on Tuesday’s call the recovery from the COVID-19 pandemic and supply chain shortages “will be more gradual than previously expected,” and drive flat sales in 2023.

Malave said Lockheed’s aeronautics sector’s sales will likely be down slightly next year, due to lower production volume on the F-35. Deliveries of the fighter next year will likely be flat, he said, but that will be because the company recorded sales in advance with long-lead procurements. He expects that to lessen in 2024.

“It’ll be a period of catch-up on sales for aero,” Malave said.

However, Malave said the company’s work on classified programs will be a bright spot for Lockheed Martin in 2023. Taiclet also said both classified programs and programs of record will “ramp up from 2023 to 2024 meaningfully,” and account for the bulk of 2024′s projected growth.

As more F-35 fighters are delivered and flying regularly around the world, he said, that will mean more sustainment work for the company.

And as the pandemic’s effects and supply chain troubles wane in 2024, Taiclet said, a steady production rate of 156 F-35s per year — roughly 80 for the U.S. and 75 for international customers — will be achievable.

Malave also said production of F-16 fighters, which Lockheed Martin is now building for foreign customers, is also expected to accelerate in 2024.

Meanwhile, Taiclet said Lockheed is “far down the road” on developing autonomous drone wingmen the Air Force wants to team with piloted fighters. He said the systems need more testing, but the company should have “hit a couple of milestones” on the program by the next earnings call in January. Taiclet said the company will be able to share more details on its status then.

He noted Lockheed is making progress on increasing production of High Mobility Artillery Rocket Systems, or HIMARS. The United States in recent months has shipped 20 HIMARS units to Ukraine, which it has used in its fight against Russia.

Lockheed advanced the funding for $65 million in parts it would need to build more HIMARS, before it had a government contract for more, so it could be ready to build them quickly, Taiclet said. He said the company wants to build 96 HIMARS per year, and those long-lead time parts are now being manufactured.

Source: Defense News

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