Lockheed Martin Corp.’s LMT business unit, Aeronautics Co, has won a modification contract from the U.S. Navy to provide recurring logistics sustainment support services for the F-35 Lightning II jets, which were delivered to the U.S. Air Force, Marine Corps, Navy, non-Department of Defense (DoD) members, and foreign military sales (“FMS”) customers.
The contract is valued at $769.5 million and the contracting activity is Naval Air Systems Command, Patuxent River, MD.
Per the contract, Lockheed Martin will support ground maintenance activities, action request resolution, depot activation actions, and operations and maintenance of the Automatic Logistics Information System. The contract also covers reliability, maintainability and health management execution, supply chain management; and activities to provide initial training for pilot and maintainer.
The latest modification contract includes service purchases worth $372.1 million for the Air Force, $181.3 million for the Marine Corps, $115.0 million for the Navy; $93.1 million for international partners, and FMS of $8.0 million.
Work is scheduled to be complete by Dec 2016. Majority of the work will be performed in Fort Worth, TX, while the rest will be carried out in El Segundo, CA; Orlando, FL; Greenville, SC; and Warton, the UK.
The contract will use fiscal 2016 operation and maintenance funds (Air Force and Navy); fiscal 2015 and 2016 aircraft procurement funds (Air Force and Navy); international partner and FMS funds.
We remind investors that Lockheed Martin is the largest U.S. defense contractor, with a platform-centric focus that guarantees a steady inflow of follow-on orders from its leveraged presence in the U.S. Army, Air Force, Navy and IT programs. The company expects organic growth in 2016 to be driven primarily by the Aeronautics segment and specifically by the F-35 program. Overall, the company has delivered 45 aircraft in 2015, bringing in total deliveries of 154 aircraft as of Dec 31, 2015. Additionally, it has 114 aircraft in its backlog at Dec 31, 2015.
Zacks Rank
Lockheed Martin currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the aerospace and defense equipment industry include HEICO Corporation HEI, AeroVironment, Inc. AVAV and Spirit AeroSystems Holdings, Inc. SPR. While HEICO Corporation sports a Zacks Rank #1 (Strong Buy), AeroVironment and Spirit AeroSystems both carry a Zacks Rank #2 (Buy).
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