The companies most affected by the government shutdown weren’t much affected at all.
They simply followed the old Boy Scout motto: “Be prepared.”
The biggest U.S. federal contractors reported third-quarter earnings this week that showed little harm to their profits, despite the 16-day shutdown and the ongoing budget cuts caused by sequestration.
“They’re cutting costs and becoming more efficient on the production,” said Brian Ruttenbur, an analyst with CRT Capital Group LLC in Stamford, Connecticut. “They used sequestration as a ploy to become more efficient.”
Lockheed Martin Corp. and Northrop Grumman Corp. were among those contractors raising their full-year earnings estimates this week.
So far, most of the sequestration cuts have fallen on smaller purchases, such as construction and information technology, not the bigger weapons systems, said Brian Friel, an analyst at Bloomberg Industries.
“Because of the mix of contracts that the largest companies have, they’re more insulated from the short-term pullback,” Friel said.