(Finance) – Fitch Ratings improved the Long-term Issuer Default Rating (IDR) Of Lockheed Martinthe world’s largest military contractor, from “A-” to “TO“. The outlook is “stable”.
The upgrade is primarily driven bylarge and growing order book of Lockheed Martin of nearly $160 billion and more than 2x revenue, along with its decades-old platforms of manufacturing and sustainment work, advanced technological capabilities, leading position in the global defense industry, and strategic importance to state government United.
Lockheed Martin’s ratings are further supported by operating margins above average compared to other prime contractors, by one significant cash generation and financial flexibility. Fitch expects the company to continue to operate long-term EBITDA leverage around or below 2.0x and (CFO – CapEx)/Debt around 30%, including measured debt-financed share repurchases and potential M&A opportunities.
“We expect that i defense spending plans of the United States and international governments remain high in the coming years,” the note reads.
THE potential rating risks include the long-term dimension and priority of US defense spending; possible operational disruptions on large and/or complex fixed-price contracts; moderate program concentration; and increased competitive pressure in some parts of the space sector.