By Doug Cameron
Lockheed Martin Corp. expects its order backlog to reach a record $140 billion by the end of the year, showing the resilience of some U.S. defense companies in the face of domestic budget pressures and geopolitical turmoil.
The world's largest defense company by revenue said Tuesday that while it expects sales growth to slow next year following surging sales of missiles, space systems and its F-35 combat jet in 2019, it will still generate more cash for dividends and stock buybacks.
The Pentagon is working under a temporary budget that freezes funding at current-year levels and prevents the launch of some new programs, but Lockheed Martin said prior contracts and recent wins in areas such as hypersonic missiles and radar systems provide a long tail of future work.
U.S. defense companies have benefited from higher Pentagon spending over the past two years, but investors remain concerned about a domestic budget impasse as well as the outcome of the next presidential election.
Lockheed Martin Chief Financial Officer Ken Possenriede said the company expects to add $17 billion in orders this year, with the backlog stretching out further than in recent years. This in part reflects the big ramp-up in F-35 production, with deliveries set to climb to 140 next year from 131 in 2019. A final deal for the sale of more than 400 jets -- which at $35 billion would be the largest-ever military contract -- is expected in the next couple of weeks, he said.
Mr. Possenriede said the outlook for its Sikorsky helicopter units was improving, having been a drag on the company in recent quarters because of a downturn in demand for commercial choppers. Sikorsky is building the new presidential helicopter fleet, as well as new choppers for the Navy and the Air Force.
He said in an interview that staffing remains one of the biggest challenges, though the logjam of security clearances that has roiled the industry in recent years is clearing.
His comments came as Lockheed Martin reported forecast-beating quarterly profit and raised its full-year guidance.
The initial 2020 outlook fell just shy of analysts' expectations.
Profit in the September quarter rose to $1.61 billion from $1.47 billion a year earlier, with per-share earnings climbing to $5.70 from $5.18, well above the $5.02 consensus among analysts polled by FactSet.
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