Lockheed Martin Corporation Execs Spill The Beans On The F-35

[unhappycamper]

http://www.dailyfinance.com/2014/01/24/lockheed-martin-corporation-execs-spill-the-beans/



Lockheed Martin Corporation Execs Spill The Beans On The F-35
By Rich Smith
Jan 24, 2014

The F-35 is unique

Lockheed Martin's F-35 is a really big deal. With projected sales in excess of $1 trillion on the jet, former Chairman of the Joint Chiefs Admiral Mike Mullen went so far as to say that it's probably the last manned fighter jet model America will ever build.

Already, Lockheed CEO Marillyn Hewson is able to boast that, thanks to Lockheed owning the F-35, "no one else has a fifth generation fighter and it's a unique capability" for Lockheed. CFO Bruce Tanner points out that because the F-35 is "through the developmental cycle," Lockheed doesn't have to spend as much on R&D to develop a new plane, while its rivals must: "Our portfolio is available now ... I think that's got us very uniquely positioned."

~snip~

The F-35 is a big part of Lockheed's business

Lockheed Martin delivered 35 F-35s to its customers in 2013, five more than in 2012. So the program is still very definitely in the "low-rate, initial production" phase of its rollout. Yet already, Hewson pointed out in yesterday's conference call, "the F-35 [is] a very significant element of our portfolio. It ... represents 16% of our revenue in 2013 and it's going to continue to grow."

~snip~

But the F-35 is not very profitable... yet

As important as the F-35 is to Lockheed's future, though, investors still need to keep a close eye on the bottom line. Pointing to the 6% decline in aeronautics revenues in 2013, Tanner noted that operating profit margins held more or less steady at 11.4% -- not because the company is building more F-35's, though, but in spite of it. In emphasizing Lockheed's "improved performance from multiple lines of business," Tanner noted that diversification was actually "helping to offset the dilutive effects of additional F-35 volume" (emphasis added).