Lockheed Martin Corp. LMT and United Technologies Corp. UTX, two major aerospace and defense companies, both said Tuesday morning that management raised their full-year sales and earnings guidance on strong first-quarter performance. Despite this, market factors, including high Treasury rates, erased early gains.
Lockheed Martin
Maryland-based Lockheed Martin reported net sales of $11.60 billion, up approximately $400 million from the prior-year quarter. Earnings per share were $4.02, outperforming analyst estimates by approximately 70 cents.
CEO Marillyn Hewson said Lockheed Martin’s “strong operational and program execution” during the quarter enabled management to increase sales and earnings guidance for the full year. The company reported good sales growth in Aeronautics and Rotary and Mission Systems, which represent approximately 40% and 27% of total sales.
Aeronautics sales increased 7% primarily due to increased production and sustainment volumes in Lockheed Martin’s F-35, F-16 and F-22 aircraft programs. Likewise, Rotary and Mission Systems sales increased 3%, driven by higher net sales in various programs, including training and logistics solutions.
Lockheed Martin increased its full-year net earnings guidance by $350 million from the previous guidance of $50 billion to $51.5 billion announced in January. Diluted earnings are expected to range between $15.80 and $16.10 per share, up 60 cents from the previous guidance.
United Technologies
Connecticut-based United Technologies said organic sales increased 6% during the quarter, the “strongest first-quarter organic growth rate since 2011,” according to CEO Gregory Hayes. Adjusted earnings per share were $1.77, outperforming analyst expectations by approximately 22 cents.
Hayes mentioned the strong growth across United Technologies’ business segments contributed to positive momentum for the quarter. The CEO highlighted several achievements during the earnings call, including 7% sales growth at Climate, Control and Security and 9% sales growth at Pratt & Whitney. The former recorded its “best sales growth” since inception six years ago, highlighted by a strong product mix. Such achievements enabled management to increase full-year guidance for both sales and adjusted earnings.
Market factors drown early gains
Although both companies traded higher on strong revenue and earnings guidance, share prices nosedived as the 10-year Treasury rate eclipsed 3% for the first time in four years, according to CNBC.
The spread between the 10-year Treasury rate and the one-year Treasure rate has declined from a three-year high of 2.87% to its current value of 0.65%.
As of 2 p.m., Lockheed Martin had shed approximately 6.3% from its previous close, while United Technologies slipped approximately 1.85%.
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