Lockheed Martin Corporation (LMT) has received a follow-on contract for Guided Multiple Launch Rocket System (‘’GMLRS’’) Unitary rockets worth $445 million from the U.S. Army Aviation & Missile Command.
Under the contract, Lockheed will provide 735 GMLRS Unitary rocket pods (six rockets per pod) and 508 Reduced-Range Practice Rocket pods for the U.S. Army and U.S. Marine Corps, as well as GMLRS pods for Foreign Military Sales (‘‘FMS’’) customers including Japan, Jordan, Singapore and the United Arab Emirates. However, specific numbers of rocket pods for the FMS customers were not disclosed.
The GMLRS provides dependable precision strike and continues to exceed operational-readiness requirements. GMLRS is specifically designed to destroy high-priority targets at ranges up to 70 kilometers and is employed in both urban and non-urban environments. Irrespective of weather, the long-range rocket delivers precision strike beyond the range of most conventional weapons.
The GMLRS Unitary rocket is successfully meeting the needs of the U.S. Army, U.S. Marine Corps and British Army artillery units in combat. Also, the program is looking ahead to meet evolving customer requirements by testing new technology in their IRAD-funded GMLRS+ program, which will integrate advanced capabilities that will keep GMLRS the world’s premier long-range precision artillery rocket.
This is the sixth purchase of the precision munition by the U.S. Army. So far, approximately 2,000 GMLRS rockets have already been issued in support of U.S. and allied military operations. Work on the contract will be performed at the company’s facilities in Camden, Arkansas and Dallas, Texas. Deliveries are expected to begin in December 2012.
Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus, and continues to benefit from strong defense spending on a number of its platform programs, such as the F-35 Lightning II Joint Strike Fighter, C-130 Hercules & C-5 Galaxy transport aircrafts, F-16 Fighting Falcon multi-role jet, and sea-based missile defense and the Terminal High Altitude Area Defense system.
Also, the company’s focus on debt repayment, its ongoing share repurchase program and the incremental dividend will continue to shore up shareholder return.
However, defense budget cuts, headwinds in margins, higher pension liability and risk regarding retrenchment cost recovery are concerns for the company. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. In the near term, we would advise investors to accumulate its short-term Zacks #1 Rank (Strong Buy rating) peer like Embraer SA (ERJ).
Based in Bethesda, Maryland, Lockheed Martin is a global security company that is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.
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