Large Contractors Report Steady Sales Despite Sequestration

Garry L./Shutterstock.com

Three large defense contractors reported steady first quarter sales on Wednesday and noted no major changes in their business strategy because of cuts to federal spending due to sequestration.

Unlike Lockheed Martin, which reported its quarterly earnings on Tuesday, Boeing, Northrop Grumman and General Dynamics did not adjust their annual outlooks based on changes to the the federal budget.

“In general, we do not see sequester as a significant threat to ’13. Most of our sales are in our backlog,” General Dynamics Chairman and Chief Executive Officer Phebe Novakovic said during a conference call. According to its latest earnings report, the company has a total backlog of $48.5 billion, along with $25.2 billion in potential contract value for unfunded contracts, and unexercised options.

Last year, some contractors warned government officials that sequestration cuts would force mass layoffs at manufacturing facilities. Executives from BAE Systems Inc. visited Capitol Hill Tuesday to convince lawmakers to restart a production line for the Bradley Fighting Vehicle after sequestration cuts forced the Army to shut it down, Reuters reported.

Lockheed Martin was the first and only large contractor to date to change its 2013 forecast to account for sequestration. In an earnings report released Tuesday, the company said a possible $825 million hit from sequestration could put its expected sales on the “lower end” of its $44.5 to $46 billion 2013 forecast.

Northrop Grumman was more sanguine about sequestration’s impact on its business. In its earnings forecast, the company cited the stopgap-funding bill and a possible fiscal 2014 funding measure as policy items that would “support and fund the company’s programs” in the short term. The company is also assuming no “disruption” from a possible debt ceiling fight this summer, and no contract cancellations.

Similarly, Boeing said the fiscal 2013 continuing resolution bill helped shore up funding for key programs managed by the company, including the V-22 Osprey and the Chinook helicopter.

“We remain cautious regarding the potential for further U.S defense budget reductions, and the mid-to-long term impact of continued sequestration,” Boeing Chairman, President and Chief Executive Officer Jim McNerney said during a conference call.

(Image via Garry L./Shutterstock.com)

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Federal IT Applications: Assessing Government's Core Drivers

    In order to better understand the current state of external and internal-facing agency workplace applications, Government Business Council (GBC) and Riverbed undertook an in-depth research study of federal employees. Overall, survey findings indicate that federal IT applications still face a gamut of challenges with regard to quality, reliability, and performance management.

    Download
  • PIV- I And Multifactor Authentication: The Best Defense for Federal Government Contractors

    This white paper explores NIST SP 800-171 and why compliance is critical to federal government contractors, especially those that work with the Department of Defense, as well as how leveraging PIV-I credentialing with multifactor authentication can be used as a defense against cyberattacks

    Download
  • Toward A More Innovative Government

    This research study aims to understand how state and local leaders regard their agency’s innovation efforts and what they are doing to overcome the challenges they face in successfully implementing these efforts.

    Download
  • From Volume to Value: UK’s NHS Digital Provides U.S. Healthcare Agencies A Roadmap For Value-Based Payment Models

    The U.S. healthcare industry is rapidly moving away from traditional fee-for-service models and towards value-based purchasing that reimburses physicians for quality of care in place of frequency of care.

    Download
  • GBC Flash Poll: Is Your Agency Safe?

    Federal leaders weigh in on the state of information security

    Download

When you download a report, your information may be shared with the underwriters of that document.