Lockheed Martin

Lockheed's backlog of signed orders hit a record 292 billion dollars, up 27% in just three months. The biggest piece is a 52.5 billion dollar multi-year deal to build PAC-3 Patriot interceptors, the missiles that knock down incoming attacks. That is more than three years of sales already on the books, mostly from governments that reliably pay their bills.

All four of Lockheed's businesses grew, pushing sales up 11% to 20.7 billion dollars and profit up 14% to 1.8 billion dollars, or 7.97 dollars per share. Missiles led the pack with sales up 24% as Patriot, THAAD, and battlefield rocket production ramps up. Management raised its outlook for the second quarter in a row, now expecting 80 to 82 billion dollars in sales this year, and lifted the dividend for the 24th straight year.

Lockheed is still negotiating with Washington over the next batches of F-35 jets, its biggest program, which added 710 million dollars of sales growth this quarter. Its spending on the newest batch has already passed what the government has approved and funded, and the company warns profits and cash could suffer if that gap is not fixed. It is a reminder that when one customer, the U.S. government, pays most of the bills, budget fights hit home.

Many of Lockheed's deals are fixed-price, so when a program runs over budget, the company eats the cost. This quarter brought about 125 million dollars of profit hits on the F-16 and C-130 planes and the Heavy Lift and Seahawk helicopters. Lockheed keeps less than 9 cents of profit from every dollar of sales, so those surprises sting.