WASHINGTON (Reuters) – Lockheed Martin Corp told Wall Street analysts on Monday that it had a $225 million loss on a classified development program at its Aeronautics business unit, sending its shares down, but said the work will eventually lead to a production contract.
Lockheed’s classified work has been growing as the U.S. government spends more on researching and developing next- generation weapons systems.
Lockheed raised its full-year earnings per share guidance as the U.S. weapons supplier’s space business boosted revenue, but the $225 million loss caused the company to miss analysts’ earning per share estimates.
Lockheed’s largest unit, aeronautics – which makes the F-35 fighter jet, experienced “performance issues” on the classified development program during the quarter.
After this charge and a “deep dive” with the customer in May, Chief Financial Officer Ken Possenriede told analysts “roughly 40% of that cost has already occurred, and the other 60% is embedded in the new estimate to complete” the program.
Possenriede told Reuters in an interview that “this is going to cost more and take longer to build than we anticipated, and this is the development portion of this program, it’ll then go into production and then there’ll be other pieces of this thing that will make this a strong business case for us.”
Lockheed shares were down 3% at $369.21 on Monday afternoon.
(Reporting by Mike Stone in Washington; Editing by Matthew Lewis)