Defense industry sees gains soar in 3rd quarter
WASHINGTON — The U.S. defense industry is on track for its best years in recent memory.
The five largest U.S. defense contractors — Lockheed Martin, Boeing, Northrop Grumman, Raytheon and General Dynamics — reported healthy financial results for the thirdquarter, in a series of earnings reports over the pastweek.
They benefited from a defense budget that has grown significantly under a Republican- controlled Congress and White House, aswell as a 2017 tax overhaul that slashed their corporate tax rates.
“We’re seeing more and more signs of sustained long-term stable defense budget in the U.S.,” Boeing chief executive Dennis Muilenburg said.
They have also taken advantage of a more stable budget environment that has made it easier for them to prepare for the future. Last year Congress lifted the so-called sequestration budget caps that have limited defense spending since 2013. For the first time in years, lawmakers passed their most recent spending bill without a so-called continuing resolution, giving defense firms a better blueprint for their future sales.
Raytheon saw its sales jump by 8.3 percent on the backs of a stronger missiles business, which has benefited from new international orders.
General Dynamics saw its annual revenue increase by 13.7 percent to $28.5 billion and beat analysts on earnings, growth that was fueled by lower tax rates and a $9.7 billion acquisition of a government IT contractor called CSRA.
Lockheed Martin saw sales of $14.3 billion over past quarter, a 16 percent jump over the samequarter a year ago. The company continued to reap the benefits from the manufacture of the F-35 Joint Strike Fighter, its marquee program, with the Defense Department awarding it an $11.5 billion contract to build the next lot of jets. Andit alsowona pair of key footholds to develop hypersonic military technology, missiles that can punch throughdefense systemsby flying faster than the speed of sound.
Northrop Grumman saw its quarterly sales increase 23 percent over a year ago, to $8.1 billion. The company began a succession plan that will replace longtime chief executive Wes Bush with Kathy Warden, who has been groomed for the position for years as chief operating officer.
Boeing reported thirdquarter revenues of $25.1 billion. It suffered from higher costs because of its KC-46 Tanker aerial refueling aircraft.
But a string of multibillion- dollar long-term wins on the Navy’s MQ-25 aerial refueling drone, the Air Force’s T-XTrainer and the Air Force’s UH-1N helicopter replacement offered spots of hope for future growth.
Adam Smith, the Democratic representative from Washington who would most likely become chair of the House Armed Services Committee should the Democrats retake the House, has said defense budgets will probably not stay at their current level. “I think the number’s too high,” he said.
U.S. defense contractors, including Boeing, reported a boost in third-quarter revenues.