Lockheed Martin’s space
division reported sharply higher profit margins for the three months ending March 31 on the strength of better operating results at its rocket-making affiliate, which it owns jointly with Boeing,
and a one-time payment from a customer that terminated a commercial launch contract, Lockheed Martin Chief Financial Officer Bruce Tanner said April 22.
Presenting the Bethesda, Md.-based company’s financial results, Tanner referred to the contract-termination payment as “a little bluebird that came in” and helped Lockheed Martin
increase its operating profit margin to 12.3 percent, compared to 10.3 percent for the same period in 2007.
Mobile satellite services provider Inmarsat of London cancel
ed an Atlas 5 launch contract with Lockheed Martin in favor of the promise of an earlier launch aboard an International Launch Services Proton-M rocket.
For the three months ending March 31, Lockheed Martin Space Systems reported revenue of $1.88 billion, up 5 percent from a year earlier. The improved results were in spite of a decline in revenue from strategic and defensive missile systems and from satellites, both of which are in the Space Systems division.
Lockheed Martin booked revenue
from one commercial satellite in the quarter – the AMC-14 telecommunications spacecraft that has been given up for lost by its owner, SES Americom, following a launch failure in March – after
no commercial sales a year earlier. While the delivery of one commercial satellite compared to zero a year earlier would increase revenue
by some $125 million, the company said overall satellite sales were down as government business declined compared to a year ago.
Lockheed Martin books revenue
from a contract once the satellite is delivered to the customer, an accounting practice that results in large swings in quarterly sales
The missile and satellite declines were offset by increased revenue
from the NASA Orion Crew Exploration Vehicle in development, and from improved results from the United Launch Alliance joint venture,
Delta rockets to the U.S. government.
“We are hitting our stride in that organization and this [financial performance] reflects that,” Tanner said during a conference call. “That benefit should be sustainable.”
Lockheed Martin also reported a net gain of $16 million in its Space Systems division resulting from the
2006 sale of its stake in International Launch Services (ILS). Lockheed Martin’s contractual obligations for several ILS launches booked before the sale will remain until the launches associated with these contracts are completed.
ILS has two more launches, both planned for this year, that retain Lockheed Martin contract guarantees. Tanner said these two launches, once conducted, will permit the company to recognize a final $57 million remaining in deferred gains.