In January Deloitte’s aerospace and defense outlook forecasted that the global defense industry’s revenue would continue sliding as a result of military spending cuts. The report also said the commercial aircraft industry would have record revenues in 2013. Here’s a look at second quarter company financials and billionaire trading of three aerospace companies that reflect that outlook.
In related news, the U.S. Department of Defense was busy this week awarding defense contractors with total contracts valued at around $1.375 billion. Who won the lion’s share? Lockheed Martin.
Lockheed Martin (NYSE:LMT)
Up 36% over 12 months, Lockheed Martin Corporation (NYSE:LMT) has a market cap of $39.82 billion.
The current share price is $124.06, and it trades with a P/E of 14.40.
Lockheed Martin Corporation is a global security company that is engaged in the research, design, development, manufacture and integration of advanced technology systems and products. The company was formed in 1995 by combining the businesses of Lockheed Corporation and Martin Marietta Corporation. Lockheed Martin operates in four principal business segments: Aeronautics, Electronic Systems, Information Systems & Global Services and Space Systems.
Guru Action: As of June 30, 2012, Manning & Napier Advisors Inc. bought a new holding of 23,044 shares at an average price of $102.15 for a gain of 21.4%.
Guru Jean-Marie Eveillard increased his position by 155.75%, buying 626,088 shares at an average price of $102.15 for a gain of 21.4%.
Here is more Guru trading on the sell side.
Lockheed Martin Corporation reported second quarter 2013 net sales of $11.4 billion compared to $11.9 billion in the second quarter of 2012. Net earnings in the second quarter of 2013 were $859 million, or $2.64 per diluted share, compared to $781 million, or $2.38 per diluted share, in the second quarter of 2012. Cash from operations in the second quarter of 2013 was $623 million, compared to cash from operations of $845 million in the second quarter of 2012.
“Overall, we had strong operational performance and program execution across all business areas this quarter, enabling us to increase 2013 financial guidance for operating profit, earnings per share, and cash from operations," said Lockheed Martin CEO and president Marillyn Hewson.
B/E Aerospace Inc. (BEAV)
Up 79% over 12 months, B/E Aerospace Inc. (BEAV) has a market cap of $7.63 billion.
The current share price is $72.82, and trades with a P/E of 29.40.
B/E Aerospace Inc. is the world's leading manufacturer of aircraft cabin interior products and the world's leading distributor of aerospace fasteners and consumables.
Guru Action: As of June 30, 2012, Guru Jeremy Grantham bought a new holding of 6,951 shares at an average price of $62.19 for a gain of 17.1%.
Guru Mario Gabelli also bought a new holding of 17,720 shares at an average price of $62.19 for a gain of 17.1%.
Here are two Gurus who reduced or sold in the second quarter.
B/E Aerospace Inc. reported second quarter 2013 financial results with revenue of $850.3 million, increased $82.2 million, or 10.7%, as compared with the prior year period. Second quarter 2013 operating earnings were $158.7 million, an increase of 15.2%, and an operating margin of 18.7% increased 80 basis points as compared to the prior year period. Second quarter 2013 net earnings and earnings per diluted share were $92.4 million and $0.89 per share, increases of 29.8% and 29%, respectively, as compared with the prior year period.
In a company press release, Amin J. Khoury, chairman and CEO of B/E Aerospace commented, "… Our revenue growth continues to be driven primarily by the strong new aircraft delivery cycle. Approximately 60 percent of second quarter revenues was driven by demand for products for new-buy aircraft. Demand for premium seating products and food and beverage preparation and storage equipment associated with robust wide body aircraft deliveries was particularly strong. In addition, orders at our consumables management segment and in our commercial aircraft spares business marked a solid upturn during the quarter as compared with the prior year period.”
LMI Aerospace Inc. (LMIA)
Down 29% over 12 months, LMI Aerospace Inc. (LMIA) has a market cap of $174 million.
The current share price is $13.54, and it trades with a P/E of 12.10.
LMI Aerospace is a leading manufacturer of aluminum aircraft parts. The company provides design engineering services and supplies structural assemblies, kits and components to the aerospace and defense markets. The company manufactures more than 30,000 products for integration into a variety of aircraft platforms manufactured by leading original equipment manufacturers and Tier 1 aerospace suppliers.
Guru Action: As of June 30, 2012, Guru Chuck Royce bought a new holding of 545,610 shares at an average price of $20.11 for a 32.7% loss.
LMI Aerospace Inc. reported its financial results for the second quarter ended June 30, 2013, with net sales for the second quarter of 2013 increased 52.1% to $105.5 million, compared to $69.3 million in the second quarter of 2012, primarily as a result of the inclusion of Valent Aerostructures LLC in the 2013 period. Net income for the second quarter of 2013 was $4.7 million, or $0.37 per diluted share ($0.18 excluding the impact of the elimination of contingent consideration and impairment of an intangible asset), compared to $5.1 million, or $0.43 per diluted share, in the second quarter of 2012. The company has a backlog of $421 million as of June 30, 2013, according to a company press release.
LMI’s CEO Ronald S. Saks commented, “During the second quarter, sales order flow began to slow and that trend will likely continue for the balance of 2013, as delivery of products from some Aerostructures customers were deferred into 2014.”
The company’s production rate increases on the Boeing 737 and a 767 winglet modification program are expected to result in increased sales for the remainder of 2013.
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