Lockheed Martin (LMT.N), the prominent U.S. defense company, has raised its annual sales target following the unexpected resumption of F-35 aircraft deliveries after the Pentagon started accepting the jets last week.
The company now anticipates 2024 sales to range between $70.5 billion and $71.5 billion, an increase from the previous forecast of $68.5 billion to $70 billion.
This optimistic outlook led to a 3.2% rise in the company’s shares in morning trade.
The U.S. resumed F-35 deliveries after a delay caused by software upgrade issues.
Lockheed Martin has been working on these upgrades under the Technology Refresh 3 (TR-3) program, which aims to enhance the jets’ displays and processing power.
The current delivery resumption includes incomplete software upgrades, with the Pentagon withholding some payments until all enhancements are finalized.
The F-35 program is significant, contributing around 30% of Lockheed’s revenue, making it the world’s largest defense program.
“The F-35 remains a top priority, and we recently delivered the first TR-3-configured aircraft to the customer and anticipate deliveries for 2024 to meet our expected range of 75-110 F-35s,” said CEO Jim Taiclet.
He emphasized that TR-3 improvements, involving both hardware and software, are critical for ensuring the F-35 remains the most advanced fighter aircraft globally.
These upgrades are part of a broader enhancement known as Block 4.
Despite the progress, Lockheed does not expect the complete tech refresh package to be ready for several months.
In the second quarter, Lockheed’s net income reached $6.85 per share, surpassing LSEG estimates of $6.46 per share.
Total quarterly sales increased by 8.5% to $18.12 billion, exceeding the estimated $17.04 billion.
“Beat in revenues was around $1.1 billion, but guidance was only raised by $1.5-2.0 billion, suggesting that Q2 benefited from some timing issues which changed the expected quarterly pattern Lockheed had set out previously,” noted Panmure Liberum and Agency Partners LLP.
Three months ago, Congress approved an additional $95 billion in funding for aid to Ukraine and Israel, which bolstered Lockheed’s earnings.
The ongoing conflicts in Ukraine and Israel have increased the demand for munitions, including Lockheed-made Patriot air defense interceptors used to counter incoming missiles.