BETHESDA, Md. -- Lockheed Martin reported second quarter 2017 net sales of $12.7 billion, up 9 percent compared to $11.6 billion in the second quarter of 2016. Net earnings from continuing operations in the second quarter of 2017 were $942 million compared to $899 million in the second quarter of 2016.
"Based on the corporation's strong results this quarter we increased our 2017 financial guidance for sales, profit, and earnings," said Chairman, President, and CEO Marillyn Hewson. "Our team remains focused on performing with excellence for our customers and continuing to deliver growth and outstanding value to shareholders."
Backlog at the end of the quarter was $92.1 billion compared to $96.2 billion at the end of 2016.
INDUSTRY SEGMENTS
Aeronautics
Aeronautics' net sales in the second quarter of 2017 increased to $5.2 billionn, or 19 percent, compared to $4.4 billion in the same period in 2016. The increase was primarily attributable to higher net sales of approximately $525 million for the F-35 program due to increased volume on aircraft production and sustainment activities; and about $120 million for the C-130 program due to aircraft configuration mix; and about $110 million for the C-5 program primarily due to increased deliveries (three aircraft delivered in 2017 compared to two in 2016) and higher sustainment activities.
Aeronautics' operating profit in the second quarter of 2017 increased to $550 million, or 15 percent, compared to $478 million in the same period in 2016. Operating profit increased approximately $90 million for the F-35 program due to increased volume on aircraft production and sustainment activities and higher risk retirements; and about $35 million for the C-5 program due to higher risk retirements and increased deliveries. These increases were partially offset by a decrease of about $30 million for the C-130 program due to the timing of expenses for sustainment programs. Adjustments not related to volume, including net profit booking rate adjustments, were about $55 million higher in the second quarter of 2017 compared to the same period in 2016.
Missiles and Fire Control
MFC's net sales in the second quarter of 2017 decreased 3 percent, to $1.6 billion compared to $1.7 billion in the same period in 2016. The decrease was attributable to lower net sales of approximately $120 million for air and missile defense programs due to lower deliveries on certain programs (primarily Patriot Advanced Capability (PAC-3)). This decrease was partially offset by an increase of approximately $100 million for tactical missile programs due to product configuration mix (primarily Joint Air-to-Surface Standoff Missile (JASSM)) and due to higher deliveries (primarily Hellfire).
MFC's operating profit in the second quarter of 2017 increased to $268 million, or 6 percent, compared to $253 million in the same period in 2016. Operating profit increased approximately $25 million for air and missile defense programs due to the achievement of contract milestones on an international program and a reserve recorded in the second quarter of 2016 for a contractual matter that did not recur in 2017. This increase was partially offset by a decrease of approximately $10 million for tactical missiles programs primarily due to performance matters on certain programs. Adjustments not related to volume, including net profit booking rate adjustments, in the second quarter of 2017 were comparable to the same period in 2016.
Rotary and Mission Systems
RMS' net sales in the second quarter of 2017 increased to $3.4 billion, or 3 percent, compared to$3.3 billion in the same period in 2016. The increase was primarily attributable to higher net sales of approximately $105 million due to certain adjustments recorded in 2016 required to account for the November 6, 2015 acquisition of Sikorsky; about $55 million for C4ISR & undersea systems & sensors (C4USS) programs due to higher volume; and about $35 million for Sikorsky helicopter programs due to higher commercial aircraft deliveries (three aircraft delivered in 2017 compared to none in 2016). These increases were partially offset by a decrease of approximately $90 million for cyber, ships, and advanced technologies (CSAT) programs (primarily Littoral Combat Ship) due to lower volume.
RMS' operating profit in the second quarter of 2017 increased to $254 million, or 26 percent, compared to $202 million in the same period in 2016. Operating profit increased approximately $40 million for Sikorsky helicopter programs primarily due to higher risk retirements; about $25 million for C4USS programs primarily due to a charge for performance matters on the EADGE-T contract recorded in the second quarter of 2016; and approximately $10 million due to certain adjustments recorded in 2016 required to account for the November 6, 2015 acquisition of Sikorsky. These increases were partially offset by a decrease in operating profit of approximately $20 million for CSAT programs primarily due to performance matters on certain programs and lower volume. Adjustments not related to volume, including net profit booking rate adjustments, were about $70 million higher in the second quarter of 2017 compared to the same period in 2016.
Space Systems
Space Systems' net sales in the second quarter of 2017 increased to $2.4 billion, or 9 percent, compared to $2.2 billion in the same period in 2016. The increase was attributable to approximately $275 million due to net sales from AWE Management Limited (AWE), which the corporation began consolidating in the third quarter of 2016. This increase was partially offset by decreases of approximately $45 million for other programs in strategic missile and defense systems and a decrease of $30 million for government satellite programs (primarily Advanced Extremely High Frequency (AEHF) and Mobile User Objective Systems (MUOS)) both due to lower volume.
Space Systems' operating profit in the second quarter of 2017 decreased to $256 million, or 25 percent, compared to $340 million in the same period in 2016. Operating profit decreased about $70 million due to lower equity earnings from ULA; and a net $40 million increase in charges due to performance matters on certain commercial satellite programs. These decreases were partially offset by an increase of approximately $20 million for government satellite programs due to increased risk retirements, partially offset by a decrease due to contract mix (primarily ground solutions) and lower volume (primarily AEHF and MUOS). Adjustments not related to volume, including net profit booking rate adjustments, were about $10 million higher in the second quarter of 2017 compared to the same period in 2016.
Total equity earnings recognized by Space Systems (primarily ULA) represented approximately $45 million or 18 percent, of this business segment's operating profit in the second quarter of 2017 compared to approximately $120 million, or 35 percent in the second quarter of 2016.
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