Lockheed Martin Corporation (LMT) received contract options worth $46.8 million from the U.S. Air Force to begin modernizing 29 long-range radars which provide advanced warning and air traffic control surveillance over North America's airspace.
Under initial options of the Essential Parts Replacement Program (“EPRP”) contract, Lockheed will complete engineering planning and begin to upgrade 29 geographically disbursed AN/FPS-117 long-range surveillance radars. The expected follow-on contract options will replace and update all the radars' signal and data processors to current commercial technology standards, cost effectively extending their operational lives through 2025.
Per the EPRP contract, Lockheed Martin will modernize 15 radars in Alaska, 11 in Canada and 1 each in Hawaii, Puerto Rico and Utah by 2014. Under, the contract the company will also replace the secondary surveillance radar, at the radar site, used for air traffic control purposes.
Lockheed Martin's FPS-117 L-band radar provides continuous high-quality surveillance on air targets at ranges out to 250 miles. The radar is capable of offering superior performance even in high clutter environments due to its solid-state design and L-band operation. NATO has certified AN/FPS-117 radar as the world's most widely used three-dimensional solid-state radar.
In recent years, Lockheed Martin has successfully completed similar radar modernizations at sites in the United Kingdom, Germany, Romania and Kuwait. Lockheed’s L-Band radars provide support to a fleet of more than 175 long-range radars operational around the world.
Signal processing upgrades like EPRP are leveraged across this fleet, including the TPS-59, FPS-117, TPS-77, and even Three Dimensional Expeditionary Long Range Radar (3DELRR), to provide significant lifecycle cost savings for customers.
Lockheed Martin is the largest U.S. defense contractor with a platform-centric focus that guarantees a steady inflow of follow-on orders from a leveraged presence in the Army, Air Force, Navy and IT programs. Besides, shareholder value continues to be shored up by virtue of the company’s focus on debt repayment, its ongoing share repurchase program and incremental dividend payouts.
However, we are concerned about defense budget cuts, headwinds in margins, higher pension liability and risk regarding retrenchment cost recovery. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
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. The company mainly competes with Northrop Grumman Corporation (NOC) and Raytheon Company (RTN).
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