De­fense in­dus­try sees gains soar in 3rd quar­ter

Daily Southtown (Sunday) - - Business - By Aaron Gregg

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.

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