At the same time, Lockheed also announced it increased the share repurchase program by $2 billion and lifted the quarterly dividend rate 10 percent to $1.82 per share.
Lockheed operates four business segments, and all but the Missiles and Fire Control segment reported higher sales in the third quarter.
Lockheed's Missiles and Fire Control segment produced a 2 percent decrease in quarter sales to $1.73 billion from the year-ago period and operating profits fell by 9 percent to $289 million. The company said the shortfall in the sales was due to lower volumes on certain fire control programs although it said the segment did produce higher sales within the tactical missile programs due to increased delivery of primarily the Hellfire missiles.
The Aeronautics segment, which includes the F-35 business, posted a 7 percent increase in quarterly sales to $4.18 billion while operating profits increased 5 percent to $437 million. This is Lockheed's largest business in terms of revenue and represented 36 percent of total sales in the latest quarter and 31 percent of the company's operating income.
Lockheed said the Aeronautics' top-line performance was primarily due to higher net sales of about $300 million for the F-35 program due to increased volume on aircraft production and sustainment activities. However, it said the increase was partly offset by lower sales of about $50 million for the C-5 Galaxy airlifter program.
Elsewhere, the Rotary and Mission Systems segment, which includes Sikorsky operation, produced a sales increase of 55 percent in the third quarter to $3.34 billion compared with the year ago period and operating profit was up less than 1 percent to $247 million. The company's Space Systems segment's sales were up 3 percent to $2.28 billion from the same period in 2015, with segment operating profits soaring 70 percent to $450 million from the year-ago period.
Meantime, Lockheed on Tuesday provided a slight lift to its full-year 2016 adjusted sales and profit forecast and provided an upbeat sales projection for next year, which is above Street consensus.
As for profits, Lockheed is looking for full-year 2016 diluted earnings per share from continuing operations of about $12.10 a share, which is above its prior range guidance of $11.15 to $11.45 per share. The per-share results are adjusted for the IS&GS divestiture.
In terms of full-year 2016 sales, the company forecast $46.5 billion, which is adjusted to reflect the August 16 divestiture of Lockheed's Information Systems & Global Solutions (IS&GS) business segment. Previously, Lockheed had forecast back in July that it expected the sales to be a range between $45 billion and $46.2 billion.
In terms of the 2017 outlook, Lockheed said it expects sales to increase about 7 percent compared with 2016. That is slightly above analysts' average estimate for full-year sales to rise 3 percent. Lockheed said its total business segment operating margin for full-year 2017 is expected to be in the 10 percent to 10.5 percent range.
Depending on the timing of F-35 collections, the company said it expects cash from operations next year to be "greater than or equal to $5 billion or greater than or equal to $5.7 billion. The preliminary outlook for 2017 assumes the U.S. Government continues to support and fund the corporation's key programs."
Finally, Lockheed said it had about $950 million of potential cash exposure and $2.3 billion in termination liability exposure as a result of the F-35's Lot 9 and 10 low-rate initial production contracts. The F-35 contract negotiations for the F-35 remain unresolved, although in August the Pentagon did approve around $1 billion in funding as part of a partial reimbursement of the production costs to Lockheed.