WASHINGTON (AP) — Defense contractor Lockheed Martin Corp. said Tuesday that its second-quarter profit rose 12 percent thanks to stronger military hardware sales and a gain from plans to sell off a business unit.
Earnings from the nation's biggest supplier of military equipment beat Wall Street expectations and the company raised its earnings per share outlook by 15 cents mostly due to a lower expected share count and an expected $30 million of higher profits in its space division.
But it also trimmed its revenue outlook.
Its shares rose 80 cents, or 1.1 percent, to $75.68 in morning trading Tuesday after climbing as high as $76.34 earlier in the session.
The Bethesda, Md., company reported net income of $825 million, or $2.22 per share, up from $734 million, or $1.88 per share in the same quarter last year.
Revenue rose 4 percent to $11.44 billion from $11.07 billion. Lockheed said sales were up in all four of its divisions that make fighter jets, missiles, satellites and defense electronics.
Even excluding tax gains of $96 million from the unit that Lockheed is trying to sell, the company's earnings of $727 million, or $1.96 per share, topped Wall Street expectations.
Analysts surveyed by Thomson Reuters were looking for $1.78 per share and revenue of $11.48 billion.
Lockheed now foresees earnings of between $7.15 to $7.35 per share in 2010 but cut its revenue forecast by $750 million to $45.5 billion to $46.5 billion because of the upcoming divestment. Analysts expect $7.29 per share on $46.93 billion of revenue.
Lockheed bought back about $782 million of its stock during in the second quarter, using some of the $1.2 billion in cash it generated during that time.
Lockheed and the rest of the defense industry are digesting big changes as the Pentagon, their biggest customer, tightens budgets and toughens rules for contractors to cut costs.
"In the new reality of escalating demands and increasing constraints on our resources, we continue to refine our portfolio of capabilities," said Lockheed CEO Robert Stevens.
As part of that shift, Lockheed said in June that it planned to sell two units that provide a wide range of services for intelligence and other government agencies; Enterprise Integration Group and the Pacific Architects and Engineers business. The company said the changes are being driven by shifting customer demand and to avoid new rules over conflicts of interest for contractors.
Bruce Tanner, Lockheed's chief financial officer, said in an interview that the company has seen significant interest from prospective buyers.