How did the major US defense stocks record their profits in the second quarter?

WASHINGTON – No one, like the United States, spends money on arms, and this is reflected in the results of the largest defense subcontractors.

The Trump administration's pro-spending spending bill for 2019 brought the Pentagon's spending power to a total of $ 717 billion. Next week, the Senate will vote on a $ 1.3 trillion fiscal agreement for fiscal year 2020 including $ 738 billion for defense.

This week, Lockheed Martin, Boeing, General Dynamics, Northrop Grumman and Raytheon, the five largest US defense firms, released their second quarter results. Although the quarterly performance of the companies remained strong, their inventories remained broadly unchanged. The US iShares Aerospace and Defense ETF was slightly higher this week after the release of the report. So far this year, the benchmark ETF has increased by almost 26%.

Here's how the giants of the US defense industry did.

Lockheed Martin's shares initially exploded after the company reported strong second quarter results, but shares slid during the day and closed lower. The Pentagon's largest arms supplier recorded another strong quarter and the company raised its guidance for 2019 in terms of earnings and revenues.

The defense giant is now expecting an annual profit of between $ 20.85 and $ 21.15, with expected revenues ranging from $ 58.25 to $ 59.75 billion. Lockheed Martin saw its four operating units generate year-over-year increases in operating income for the quarter. The Lockheed order book has reached "a new record," said Marillyn Hewson, chairman of the board of directors, in a statement, with a total of $ 136.7 billion in orders.

Hewson also said that hypersonic weapons contracts would represent $ 3.5 billion across the company as all transactions are finalized.

Boeing's defense activities remained strong in the second quarter, although investors focused on the company's commercial aircraft unit and the shares slipped. The Pentagon's second largest contractor recorded a $ 6.6 billion increase in revenues in the second quarter, an increase in the production volume of armament programs, satellites and F / A fighter planes -18 being at the origin of this increase.

In addition, Boeing received several significant Defense Department contracts during the quarter. These contracts included an additional $ 194 million for the construction of new-generation Chinook MH-47G helicopters and $ 250 million for the construction of the JDAM (Joint Direct Attack Munition) bomb for the Air Force.

Raytheon, the largest missile manufacturer in the world, posted a profit of $ 2.92 per share for net sales of $ 7.2 billion. The company 's backlog increased to $ 43.1 billion, up $ 3.3 billion or 8% from the same period last year. The defense company also raised its guidance for 2019 on sales, earnings per share and cash flow from operations.

The company's Integrated Defense Systems Division reported operating income of $ 264 million in the second quarter, with cash inflows of $ 485 and $ 375 million respectively to supply the Patriot missile defense system to Romania and Qatar. .

Raytheon President and CEO Thomas Kennedy said the merger with United Technologies "is progressing well" and that he expects the deal to be finalized in the first half of the year. ;next year.

Northrop Grumman shares rose 5.9% after the company announced earnings of $ 5.06 for the second quarter, well above the $ 4.68 per share expected by Wall Street badysts surveyed by FactSet. With equally strong revenues, at nearly $ 8.5 billion, Northrop's four business units saw their profits improve over the quarter compared to the same period last year. The increased production of the F-35 fighter aircraft led to an increase in Northrop's aerospace business, where sales in the second quarter increased 1.6% to approximately $ 3.4 billion compared to the same period last year. in the previous year.

The defense giant said its backlog has increased by 10%, with orders totaling about $ 63 billion. Northrop increased its guidance for the full year of 2019 in the range of $ 19.30 per share to $ 19.55 per share, up from the previous forecast of $ 18.90 per share in the society.

General Dynamics reported a revenue of $ 9.6 billion in the second quarter of 2019, up 4% from the previous year, with a net profit of $ 806 million.

The company's aerospace unit captured $ 2.2 billion in orders during the quarter, including $ 495 million from the US Navy for work on the Columbia-clbad ballistic submarine program, contracts of $ 360 million for the provision of intelligence services to clbadified customers and $ 260 million in the United States. Ammunition production army.