Lockheed Martin Corp (NYSE:LMT) stock tumbled more than 5% in early trade as program losses hit its profits for the second quarter.
The defense and aerospace firm reported pre-tax losses on programs of $1.6 billion and other charges of $169 million, which impacted earnings per share by $5.83.
The $1.6 billion charges were primarily due to cost overruns and performance issues on a classified Aeronautics program, the Canadian Maritime Helicopter Program, and the Turkish Utility Helicopter Program, combined with other asset write-offs and tax-related liabilities.
Net earnings for the quarter were $342 million or $1.46 per share, far below the $6.50 expected.
Revenue of $18.2 billion was also short of the Wall Street consensus of $18.58 billion.
Due to the program charges and related execution issues, the company’s margins shrank to 4.1% from 11.9%.
Lockheed Martin maintained its full-year sales guidance of $73.75 billion to $74.75 billion but downwardly revised its EPS guidance to a range of $21.70 to $22 from its earlier guidance range of $27 to $27.30.
Lockheed Martin CEO James Taiclet noted that during the quarter, the US and allied customers asked the company to accelerate a number of key programs, such as additional F-35 fighter jet purchases and US Army missile-related contracts.
“At the same time, our ongoing program review process identified new developments that caused us to re-evaluate the financial position on a set of major legacy programs,” Taiclet said. “As a result, we are taking a number of charges this quarter to address these newly identified risks.”
Shares of Lockheed Martin traded down 5.6% at about $435 on Tuesday morning.