Nobody spends money on arms like the USA - here's how defense giants are doing

WASHINGTON, D.C. - There's no business like America's arms business.

Defense industry giants Lockheed Martin, Boeing, General Dynamics, and Northrop Grumman posted third-quarter earnings (Raytheon will release earnings on Thursday).

Here's a look at how they did.Advertisement



The world's largest plane maker beat profit expectations in Q3 despite declining revenue, which fell from $25.8 billion to $23.9 billion.

Boeing raised its target for jetliner deliveries for the year to between 745-750 from 740-745, and kept its operating cash flow target of more than $10 billion unchanged.

The additional planes will boost revenue by $500 million, which prompted Boeing to raise its year-end revenue target to between $93.5 billion and $95.5 billion.


Deliveries were down nearly 3% from a year ago, reflecting slower production of the company's profitable 777 and 737 models.

The closely watched deferred production cost balance for Boeing's 787 Dreamliner, a tally of the manufacturing costs not yet recouped by sales, declined about $150 million in the quarter to $27.5 billion, reflecting the fact that the high-tech plane is now profitable by some accounting measures.

Boeing's earnings rose to $2.28 billion, or $3.60 per share, in the quarter, from $1.70 billion, or $2.47 per share, a year earlier.

Reuters contributed to this report.

Northrop Grumman

Northrop Grumman

Northrop Grumman's Q3 earnings report showed sales reaching $6.2 billion with the company's aerospace unit seeing a 9% increase in sales (approximately $2.78 billion) due to higher demand for drones, manned aircraft, and the F-35 fighter.

It should be noted that while Lockheed Martin is the prime contractor for the F-35, Northrop Grumman develops the fifth-generation fighter jets' center fuselage, radar and avionics suite.

Northrop is also a subcontractor to Boeing on the F/A-18 Hornet.


The company's net earnings rose to $602 million, or $3.35 per share, up from $516 million, or $2.75 per share, a year earlier.

Looking forward, Northrop raised its earnings forecast for the third time to $11.55 —11.75 per share up from $10.75—$11.00.


Lockheed Martin

Lockheed Martin

The Pentagon's top weapons supplier posted better than expected quarterly earnings due in part to sales of helicopters from newly acquired manufacturer Sikorsky.

Lockheed Martin said Q3 sales in its rotary and mission systems business unit rose 55% to $3.35 billion, including approximately $1.2 billion in sales of Sikorsky helicopters.

The defense giant acquired Sikorsky, which notably manufacturers UH-60 Black Hawks and the presidential helicopter, for a cool $9 billion in June from United Technologies Corporation.

uh60Considered a bellwether for the US defense sector, Lockheed Martin earned an adjusted $3.61 per share on revenue of $11.55 billion. Analysts were looking for adjusted EPS of $2.89 on revenue of $11.45 billion.

The world's largest defense contractor also raised its 2016 adjusted profit and sales outlook. The company raised its profit forecast to $12.10 per share from $11.15 – $11.45, and adjusted sales to $46.5 billion from $45 billion — $46.2 billion.

Despite significant snags in developing America's most expensive weapons system, sales in Lockheed Martin's aeronautics business, the company's largest, rose 7% (approximately $267 million) compared to the same timeframe in 2015.


This increase is due to "higher net sales of approximately $300 million for the F-35 program due to increased volume on aircraft production and sustainment activities," according to the earnings report.

Looking forward, Lockheed Martin anticipates its 2017 net sales to increase by approximately 7% as compared to 2016.

General Dynamics

General Dynamics

General Dynamics Q3 revenue missed analysts' estimates as its aerospace division grappled with weak demand for business jets.

The company delivered 27 "outfitted" Gulfstream aircraft, which is down from 43 a year prior, pushing sales in the aerospace business to decline 13.5% this quarter.

Known in the defense industry for manufacturing naval ships and tanks, the Falls Church, Virginia-based company said total revenue declined 3.3% to $7.73 billion.


Revenue rose only in the information systems and technology unit, which provides cyber security systems to the US government.

Net income from continuing operations rose to $767 million, or $2.48 per share, in the Q3, from $733 million, or $2.28 per share, a year earlier.

Reuters contributed to this report.