Shares of Lockheed Martin Corporation (NYSE:LMT) dropped more than 8% in premarket trading Tuesday following a disappointing second-quarter earnings report marred by hefty charges on several defense programs.
The aerospace and defense contractor reported earnings of just $1.46 per share for the quarter, falling well short of Wall Street’s consensus forecast of $6.54. Revenue reached $18.2 billion—slightly below expectations of $18.58 billion—but edged up from $18.1 billion during the same quarter last year.
A major factor behind the earnings miss was $1.6 billion in pre-tax losses tied to specific programs, which slashed earnings per share by $5.83. The charges included a $950 million hit from a classified Aeronautics program, $570 million from the Canadian Maritime Helicopter Program, and $95 million related to the Turkish Utility Helicopter Program.
“The program charges taken in the quarter – which resulted from our ongoing rigorous monitoring and review processes – are a necessary step as we continue to take action to improve program execution,” said Chairman, President, and CEO Jim Taiclet.
Despite the financial setback, Lockheed maintained its full-year revenue outlook of $73.75 to $74.75 billion, closely aligned with analyst expectations of $74.4 billion. However, it revised its adjusted earnings forecast downward to a range of $21.70 to $22.00 per share—well below its earlier guidance of $27.00 to $27.30 and analysts’ estimate of $27.46.
Operational cash flow also declined sharply, plunging to $201 million from $1.9 billion in the prior-year quarter. Free cash flow dropped into negative territory at $(150) million, compared to $1.5 billion in Q2 2024.
“Our relentless focus on operational performance combined with our disciplined capital allocation strategy will enable us to deliver value to our shareholders, while providing the advanced solutions that America and its allies need,” Taiclet added.
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