Lockheed Martin (LMT) Beats Earnings Estimates, Divests IT Unit with Leidos

Shares of the Lockheed Martin Corporation (LMT) were up +1.74 or +0.82 percent to $212.75 per share in Tuesday’s premarket after the company released better than expected fourth quarter earnings early this morning. The company also announced it had entered into an agreement with Leidos Holdings, Inc (LDOS) to combine and separate its Information and Global Solutions division. Lockheed Martin stock closed at $211.01 per share, down -1.03 or -0.49 percent in Monday’s regular trading session.

Bethesda, Maryland based Lockheed Martin Corporation is the result of the $10 billion 1995 merger of Martin Marietta and the Lockheed Corporation, and is a major global aerospace and defense contractor.
The company is among the world’s top defense contractors, with some of its better known products such as the X-35 and F-35 fighter jets, the F-22 Raptor fighter jet, the Trident Missile and the C-130 Hercules transport plane. The company also produces Titan rockets, the Viking 1 and 2 Mars landers, as well as other aerospace components. The company employs over 116,000 people worldwide.

Lockheed Martin reported net earnings of $933 million, or $3.01 per share for the company’s 2015 fourth quarter. The company reported net sales of $12.91 billion, which compares to earnings of $2.82 per share on net sales of $904 million in the same period one year ago. The analyst consensus was for the company to report earnings of $2.92 per share on revenue of 12.39 billion.

For the full year, Lockheed Martin had net sales of $46.1 billion, with net earnings of $3.6 billion or $11.46 per share compared to $3.6 billion or $11.26 per share in 2014. The company is expecting full year 2016 earnings per share of $11.45 to $11.75 on revenue of $49.5 billion to $51.0 billion.

Fourth quarter earnings included a special charge of $67 million for workforce reductions and a non-recoverable transaction charge of $45 million associated with the company’s acquisition of Sikorsky Aircraft Corporation, in addition to the company’s strategic review of its technical services and government IT businesses . The workforce reduction charge decreased net earnings in the quarter by $0.14 per share, while the review of the IT business decreased net earnings by $0.09 per share.

Lockheed Martin Chairman, President and Chief Executive Officer, Marillyn Hewson stated in the company’s press release that, “The corporation completed a year of exceptional operational accomplishments for customers and financial returns to stockholders. The successful closure of the Sikorsky acquisition and completion of the strategic review of our IS&GS businesses, coupled with our record backlog, position the corporation for future growth and value creation for our customers and our stockholders.”

Lockheed Martin announced it had entered into a definitive agreement with Leidos Holdings Inc. to combine its Information Systems and Global Solutions segment in a tax efficient Reverse Morris Trust transaction. The transaction is expected to unlock approximately $5.0 billion in enterprise value to the company’s stockholders, which includes a onetime special payment of $1.8 billion to Lockheed Martin.

In addition, the transaction will have Lockheed Martin stockholders receive about 50.5 percent of Leidos’ outstanding equity, with an approximate value of $3.2 billion on a fully diluted basis. The deal is expected to close by the third or fourth quarter of 2016.

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Published on Jan 26, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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