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Investing.com -- Lockheed Martin Corporation shares fell by more than 8% premarket on Tuesday after the defense contractor reported second-quarter earnings that significantly missed analyst expectations, weighed down by $1.6 billion in program losses.
The aerospace giant posted earnings of $1.46 per share for the second quarter, far below the analyst consensus of $6.54. Revenue came in at $18.2 billion, slightly under the consensus estimate of $18.58 billion but up marginally from $18.1 billion in the same quarter last year.
The substantial earnings miss was primarily driven by pre-tax losses on programs totaling $1.6 billion, which reduced earnings per share by $5.83. These included a $950 million loss on a classified Aeronautics program, a $570 million loss on the Canadian Maritime Helicopter Program, and a $95 million loss on the Turkish Utility Helicopter Program.
"The program charges taken in the quarter – which resulted from our ongoing rigorous monitoring and review processes – are a necessary step as we continue to take action to improve program execution," said Lockheed Martin (NYSE:LMT) Chairman, President and CEO Jim Taiclet.
Despite these challenges, the company reaffirmed its 2025 guidance for sales of $73.75-$74.75 billion, in line with the $74.4 billion analyst estimate. However, Lockheed cut its full-year EPS forecast to $21.70-$22.00, well below the previous guidance of $27.00-$27.30 and the analyst estimate of $27.46.
Cash flow also weakened significantly, with cash from operations falling to $201 million from $1.9 billion a year earlier, while free cash flow turned negative at $(150) million compared to $1.5 billion in Q2 2024.
"Our relentless focus on operational performance combined with our disciplined capital allocation strategy will enable us to deliver value to our shareholders, while providing the advanced solutions that America and its allies need," Taiclet added.