Lockheed CEO 'hopeful' over budget resolution before Friday deadline

Media reports last night indicated President Donald Trump may be willing to wait until this September or even longer to seek federal funds for his border wall in a move that could help avert a government shutdown and move a spending bill through Congress by 11:59 p.m. Friday.

Against that backdrop, Lockheed Martin CEO Marillyn Hewson told investors in the company’s first quarter earnings call Tuesday she is “hopeful” ongoing lawmaker discussions will result in the passage of a fiscal year 2017 defense spending bill.

“We continue to urge our country’s leadership to reach an agreement,” Hewson said.

The Defense Department is operating on a continuing resolution passed in December that sets its 2017 budget at the prior year’s level. House lawmakers passed a $578 billion 2017 defense spending bill in March and the Pentagon also wants an added $30 billion amendment to that.

President Donald Trump proposed a $54 billion boost to defense spending in his fiscal 2018 budget blueprint and also seeks a $30 billion supplemental package for DoD. The 2018 “skinny budget” proposal has spending levels over the cap mandated by the Budget Control Act.

Hewson told investors she was “pleased to see” the higher amounts in both the supplemental and 2018 budget outlines. She also referenced discussions at the February Munich International Security Conference that centered around an “increasingly more volatile” global environment.

“Recent events around the world have only served to confirm this sentiment,” Hewson said. “We as a nation, need to recognize these threats and provide our military leaders relief from current budgetary constraints and allow them to address challenges in defense of our country and citizens.

“We remain hopeful that progress will continue to be made in this area and upcoming legislation will include the increases necessary to equip and maintain our fighting forces.”

Hewson noted the defense spending bill passed by the House includes money for additional F-35 fighter jets and Black Hawk helicopters.

Lockheed’s first quarter call with investors is the first in a series of earnings statements and subsequent conferences with large government contractors this week that coincides with the current CR’s expiration.

Wednesday’s schedule includes financial statements and calls with Boeing, General Dynamics and Northrop Grumman. Raytheon and L3 Technologies will follow on Thursday.

On the financial front, shares in Lockheed traded almost 3 percent lower to $268.59 as of mid-afternoon as investors appeared spooked over $184 million in charges on the company’s first quarter earnings statement related to an international air missile defense program and an international joint venture.

Both charges took $114 million off of first quarter profit, which came in at $763 million. On a per share basis, first quarter earnings were $2.61 with the charges versus Wall Street’s $2.79 consensus forecast with sales of $11.06 billion also short of analysts’ $11.13 billion.

Lockheed cut full-year earnings guidance to $12.15-$12.45 per share versus the prior $12.25-$12.55 range. The company lifted its sales forecast to $49.5-$50.7 billion versus the prior $49.4 billion-$50.6 billion range.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also connect with him on LinkedIn.

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