Lockheed Martin Corporation
) has received a contract from the Missile Defense Agency ("MDA")
worth $150 million for the production of Terminal High Altitude
Area Defense ("THAAD") Weapon System launchers and fire control and
communications equipment for the U.S. Army.
Per the contract, the company will produce 12 launchers, two fire
control and communications units, and associated support equipment
for the THAAD batteries. Out of 12 launchers, six launchers will be
allotted to THAAD Battery 5 and the rest six launchers will be
divided between Batteries 1 and 2 equally.
As per the contract, Ground hardware will be supplied at Fort
Bliss, Texas. Post production, the equipment will be assembled and
tested at Lockheed's manufacturing facility in Camden, Arkansas.
Delivery of the equipment for Battery 5 will be completed by 2015.
Lockheed had received production contract for the first two
batteries in late 2006. At Fort Bliss, Texas, the first THAAD
Battery (A-4 ADA Battery) was activated in May 2008 and the second
THAAD Battery (A-2 ADA Battery) was activated in October 2009.
In March 2011, the company had received a contract worth $789.8
million to produce the THAAD Weapon System for MDA. Per the
contract, the company had to produce 48 THAAD interceptors, six
THAAD launchers, four fire control units and additional support
equipment for Batteries 3 and 4. The delivery of these components
is expected to be completed in 2013.
Apart from domestic supply, the company has also been involved in
Foreign Military Sale ("FMS") with THAAD weapon system. In December
2011, the company received a contract worth $1.96 billion to
produce THAAD Weapon System for the MDA as well as the United Arab
Terminal High Altitude Area Defense system is used to shoot down
short, medium, and intermediate ballistic missiles in their
terminal phase using a hit-to-kill approach. It is the only missile
defense system with the operational flexibility to intercept in
both within and outside Earth's atmospheres for providing versatile
capability to the warfighter.
Coming back to Lockheed Martin, the largest defense contractor in
the world, whose customer base includes the U.S. government,
foreign governments, and other commercial buyers. The company
provides sustainment and logistic services in support of fire
control and tactical missile programs. THAAD is one of the
company's core programs.
Besides THAAD, we expect the company to benefit from a strong
defense focus on a number of its platform programs, such as the
C-130 Hercules & C-5 Galaxy transport aircrafts, F-16 Fighting
Falcon multi-role jet, MH-60 Helicopters, the Advanced Extremely
High Frequency and the Global Positioning Satellite III system
satellites, the Littoral Combat Ship, the Aegis Weapons System for
mobile and sea-based missile defense.
Recently, Lockheed posted second-quarter 2012 continuing earnings
of $2.38 per share, beating the Zacks Consensus Estimate of $1.92.
On the revenue front, the company reported quarterly net sales of
$11.9 billion, beating the Zacks Consensus Estimate of $11.3
billion by $616 million. Also, the company superseded the year-ago
quarterly revenue of $11.5 billion by $378 million.
The company presently retains a short-term Zacks #2 Rank (Buy). We
have a long-term Outperform recommendation on the stock.
The company mainly competes with
General Dynamics Corporation
Northrop Grumman Corporation
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