Lockheed Martin Corp. (NYSE: LMT) reported an 80% drop in second-quarter profit on Tuesday, citing a $1.6 billion pretax charge tied to a classified Aeronautics program and international helicopter contracts. The defense giant also slashed its full-year operating profit forecast by $1.5 billion, or 18%, to $6.65 billion, sending shares down more than 8%2.
According to reports, the steep charge included a $950 million loss on the undisclosed Aeronautics project, $570 million related to Canada’s CH-148 Cyclone maritime helicopters, and $95 million from the Turkish Utility Helicopter Program, which was impacted by U.S. sanctions on Turkish entities3.
Lockheed’s net income fell to $342 million, or $1.46 per share, from $1.64 billion, or $6.85 per share, a year earlier. Adjusted earnings of $7.29 per share beat analyst expectations of $6.44, according to LSEG data.
Revenue for the quarter came in at $18.16 billion, missing Wall Street’s average estimate of $18.57 billion. The company reaffirmed its sales and free cash flow guidance for the year, despite ongoing cost pressures from inflation and supply chain disruptions.
Defense contractors like Lockheed are facing mounting challenges from fixed-price contracts negotiated before the pandemic, which now require absorbing cost overruns. “Lockheed’s tariff risk remains low due to its largely domestic supply chain,” said Brian Mulberry, portfolio manager at Zacks Investment Management.
The company also disclosed a $4.6 billion tax dispute with U.S. authorities and said it may pursue litigation. Meanwhile, Lockheed reported progress on its F-35 program, completing hardware integration and releasing new software. The Pentagon confirmed final delivery of 72 jets held in storage earlier this month.