Lockheed Martin (LMT -2.2%) says it booked $184M in charges on two Middle East contracts, in a move that highlights the potential pitfalls of the overseas deals that have been driving growth for U.S. defense contractors.
LMT took charges on a new missile-defense system being developed for the UAE and an Abu Dhabi-based aircraft maintenance joint venture, ending a multi-quarter run of earnings beats.
In today's earnings conference call, LMT CEO Marillyn Hewson acknowledged the dent to the company's Q1 earnings but said she remained optimistic both ventures could still trigger future sales growth.
LMT says it still expects profit margins on its critical F-35 combat jet to continue rising, even as it pursues an effort to cut the cost of the most popular model to $80M each over the next several years; the F-35 is central to the company's growth plans, and a follow-on multiyear deal for 440 jets could be worth more than $30B, one of the largest-ever defense sales.
Shares are lower today, after reaching an all-time high yesterday of $276.64.