Dive Brief:
- Newly-minted Lockheed Martin CFO Evan Scott is “comfortable” with the company’s approach to mitigating tariff impacts, he said in an earnings call Tuesday. Scott also agreed with an analyst who asserted that the defense industry is more insulated from such impact than other industrial companies.
- As with many executives on calls in the wake of President Donald Trump’s April 2 tariff barrage that has rocked financial markets, executives on the Bethesda, Maryland-based company Q1 call Tuesday addressed the levies’ potential impact, with CEO Jim Taiclet asserting the company is well positioned in what he described as a “dynamic” environment.
- The company also reaffirmed its 2025 financial outlook, with the caveat that it does not include “evolving impacts of tariffs or related recoveries” and assumes the company’s programs are funded by and at levels consistent with the full year Continuing Appropriations and Extensions Act of 2025 signed by Trump on March 15.
Dive Insight:
The earnings call comes just days after Scott was named to succeed Jesus “Jay” Malave, as the company’s finance chief. Scott, who has been at Lockheed Martin for 26 years, took the role immediately, with Malave having advised the company that he was “pursuing other opportunities.”
The company reported sales rose 4% to $18 billion in the quarter year-over-year, with net earnings rising to $1.7 billion from $1.5 billion in the year-earlier quarter.
“The strong profit we realized in the first quarter provides an increased confidence in our ability to absorb currently estimated 2025 profit impacts from tariffs and the end-get announcement,” Scott said on the call. “While it will take more time to complete a thorough business assessment of these dynamics, we're optimistic about achieving our profit targets for the year.”
Scott also noted that the guidance includes several assumptions; for instance, the company continues to expect between 170 to 190 deliveries for its F-35 fighter jet production operation. Lockheed Martin also has a backlog of about 360 jets at the end of the last quarter, he noted.
He also said the outlook assumes a certain level of tariff impact, and that the company expects to work closely with its customers to mitigate potential cost increases and offset cash timing pressures. On the call, he also said that in many cases the company would have “direct protection in its supply chain” to avoid tariffs altogether, asserting “for the vast majority of our external contracts, we've got mechanisms to recover impacts.”
“Is there going to be a lag between incurring a tariff cost and recovering those costs?” Scott asked on the call. “So it's going to stay fluid, but we feel like we've got a good path now, and we'll just keep updated as that progresses throughout the year.”
