- Net sales of $15.0
billion
- Net earnings of $1.7 billion,
or $6.44 per share
- Cash from operations of $1.4
billion and free cash flow of $1.1
billion
- Returned $2.8 billion of cash
to shareholders through share repurchases and dividends
- Reaffirms 2022 financial outlook
BETHESDA, Md., April 19, 2022 /PRNewswire/ -- Lockheed
Martin Corporation [NYSE: LMT] today reported first quarter 2022
net sales of $15.0 billion, compared
to $16.3 billion in the first quarter
of 2021. Net earnings in the first quarter of 2022 were
$1.7 billion, or $6.44 per share, compared to $1.8 billion, or $6.56 per share, in the first quarter of
2021. Cash from operations was $1.4 billion in the first quarter of 2022,
compared to $1.7 billion in the
first quarter of 2021. Free cash flow was $1.1 billion in the first quarter of 2022,
compared to $1.5 billion in the
first quarter of 2021.
"Lockheed Martin had a solid start to the year by delivering
margin expansion and free cash flow above our expectations despite
recent Covid-surge impacts on our operations and supply chain. We
remain confident in our guidance for the remainder of the year and
our growth outlook beyond," said Lockheed Martin Chairman,
President and CEO James Taiclet.
"Global events this quarter marked a dramatic change in the
geopolitical environment and demonstrated the tremendous importance
of an effective deterrent to aggression by major nation-states, and
mutual defense among the United
States and its allies. The men and women of Lockheed Martin
are fully dedicated to enhancing this deterrence capability by
effectively delivering on our existing platform programs and
systems, while accelerating the integration of digital world
technologies to enable true Joint All Domain Operations for our
customers."
Summary Financial Results
The following table presents the company's summary financial
results.
|
(in millions,
except per share data)
|
|
Quarters
Ended1
|
|
|
|
|
March
27, 2022
|
|
March
28, 2021
|
|
|
Net
sales
|
|
$
14,964
|
|
$
16,258
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit2
|
|
$
1,656
|
|
$
1,749
|
|
|
Unallocated
items
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
426
|
|
489
|
|
|
Severance and
restructuring charges3
|
|
—
|
|
(36)
|
|
|
Other,
net4
|
|
(149)
|
|
(20)
|
|
|
Total unallocated
items
|
|
277
|
|
433
|
|
|
Consolidated
operating profit
|
|
$
1,933
|
|
$
2,182
|
|
|
|
|
|
|
|
|
|
Net
earnings3,4,5
|
|
$
1,733
|
|
$
1,837
|
|
|
|
|
|
|
|
|
|
Diluted earnings
per share3,4,5
|
|
$
6.44
|
|
$
6.56
|
|
|
|
|
|
|
|
|
|
Cash from
operations
|
|
$
1,410
|
|
$
1,748
|
|
|
Capital
expenditures
|
|
(268)
|
|
(281)
|
|
|
Free cash
flow2
|
|
$
1,142
|
|
$
1,467
|
|
|
|
|
|
|
|
|
1
|
The corporation
closes its books and records on the last Sunday of the calendar
quarter to align its financial closing with its business processes,
which was on March 27 for the first quarter of 2022 and March 28
for the first quarter of 2021. The consolidated financial
statements and tables of financial information included herein are
labeled based on that convention. This practice only affects
interim periods, as the corporation's fiscal year ends on Dec.
31.
|
|
2
|
Business segment
operating profit and free cash flow are non-GAAP measures. See the
"Use of Non-GAAP Financial Measures" section of this news release
for more information.
|
|
3
|
Net earnings for the
first quarter of 2021 includes severance and restructuring charges
of $36 million ($28 million, or $0.10 per share, after-tax) for
previously announced actions at Rotary and Mission Systems (RMS)
business segment.
|
|
4
|
Net earnings for the
first quarters of 2022 and 2021 include net losses of $101 million
($76 million, or $0.28 per share, after-tax) and $10 million ($8
million, or $0.03 per share, after-tax) due to declines in the fair
value of investments held in a trust for deferred compensation
plans.
|
|
5
|
Net earnings for the
first quarters of 2022 and 2021 include net gains of $103 million
($77 million, or $0.29 per share, after-tax) and $68 million ($51
million, or $0.18 per share, after-tax) due to increases in the
fair value of investments held in the Lockheed Martin Ventures
Fund.
|
|
|
|
|
|
|
|
2022 Financial Outlook
The following table and other sections of this news release
contain forward-looking statements, which are based on the
company's current expectations. Actual results may differ
materially from those projected. It is the company's practice not
to incorporate adjustments into its financial outlook for proposed
acquisitions, divestitures, ventures, pension risk transfer
transactions, financing transactions, changes in law, or new
accounting standards until such items have been consummated,
enacted or adopted. For additional factors that may impact the
company's actual results, refer to the "Forward-Looking Statements"
section in this news release.
|
(in millions,
except per share data)
|
|
Current 2022
Outlook1
|
|
|
|
|
|
|
|
Net sales
|
|
~$66,000
|
|
|
|
|
|
|
|
Business segment
operating profit2
|
|
~$7,175
|
|
|
|
|
|
|
|
Total FAS/CAS pension
adjustment3
|
|
~$2,260
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
~$26.70
|
|
|
|
|
|
|
|
Cash from
operations
|
|
≥$7,900
|
|
|
Capital
expenditures
|
|
~$(1,900)
|
|
|
Free cash
flow2
|
|
≥$6,000
|
|
|
|
|
|
|
1
|
The company's current
2022 financial outlook does not include the impacts of potential
pension risk transfer and refinancing transactions that the company
may execute opportunistically as early as the second quarter,
subject to market conditions. It also does not include any future
gains or losses related to changes in valuations of the company's
investments held in the Lockheed Martin Ventures Fund and assumes
continued accelerated payments to suppliers, with a focus on small
and at-risk businesses. In addition, the outlook reflects known
impacts from the COVID-19 pandemic based on the company's
understanding at the time of this news release and its experience
to date. However, the company cannot predict how the pandemic will
evolve or what impact it will continue to have. Therefore, no
additional impacts to the company's operations or its supply chain
as a result of continued disruption from, or policies in response
to, COVID-19 for periods subsequent to the time of this news
release have been incorporated into the company's current 2022
financial outlook. The ultimate impacts of COVID-19 on the
company's financial results for 2022 and beyond remain uncertain
and there can be no assurance that the company's underlying
assumptions are correct.
|
|
2
|
Business segment
operating profit and free cash flow are non-GAAP measures. See the
"Use of Non-GAAP Financial Measures" section of this news release
for more information.
|
|
3
|
Total FAS/CAS pension
adjustment is presented as a single amount and includes total
expected U.S. Government cost accounting standards (CAS) pension
cost of approximately $1.8 billion and total expected financial
accounting standards (FAS) pension income of approximately $460
million. CAS pension cost and the service cost component of FAS
pension income are included in operating profit. The non-service
cost components of FAS pension income are included in non-operating
income. For additional detail regarding the pension amounts
reported in operating and non-operating results, refer to the
supplemental table included at the end of this news
release.
|
|
|
|
|
|
|
|
Cash Flows and Capital Deployment Activities
Cash from operations in the first quarter of 2022 was
$1.4 billion. Capital expenditures
were $268 million, resulting in free
cash flow of $1.1 billion. The
decreases in operating and free cash flows from the first quarter
of 2021 were primarily due to lower segment operating profit and
changes in working capital due to timing.
The company's capital deployment activities in the first quarter
of 2022 included the following:
- paying cash dividends of $767
million; and
- paying $2.0 billion to repurchase
4.7 million shares (including 0.6 million shares received upon
settlement of an accelerated share repurchase agreement (ASR) in
April 2022).
Segment Results
The company operates in four business segments organized based
on the nature of products and services offered: Aeronautics,
Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS)
and Space. The following table presents summary operating results
of the company's business segments and reconciles these amounts to
the company's consolidated financial results.
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
27,
2022
|
|
March
28,
2021
|
|
|
Net
sales
|
|
|
|
|
|
|
Aeronautics
|
|
$
6,401
|
|
$
6,387
|
|
|
Missiles and Fire
Control
|
|
2,452
|
|
2,749
|
|
|
Rotary and Mission
Systems
|
|
3,552
|
|
4,107
|
|
|
Space
|
|
2,559
|
|
3,015
|
|
|
Total net
sales
|
|
$
14,964
|
|
$
16,258
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
Aeronautics
|
|
$
679
|
|
$
693
|
|
|
Missiles and Fire
Control
|
|
384
|
|
396
|
|
|
Rotary and Mission
Systems
|
|
348
|
|
433
|
|
|
Space
|
|
245
|
|
227
|
|
|
Total business
segment operating profit
|
|
1,656
|
|
1,749
|
|
|
Unallocated
items
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
426
|
|
489
|
|
|
Severance and
restructuring charges
|
|
—
|
|
(36)
|
|
|
Other, net
|
|
(149)
|
|
(20)
|
|
|
Total unallocated
items
|
|
277
|
|
433
|
|
|
Total consolidated
operating profit
|
|
$
1,933
|
|
$
2,182
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in net sales and operating profit generally are
expressed in terms of volume. Changes in volume refer to increases
or decreases in sales or operating profit resulting from varying
production activity levels, deliveries or service levels on
individual contracts. Volume changes in segment operating profit
are typically based on the current profit booking rate for a
particular contract. In addition, comparability of the company's
segment sales, operating profit and operating margin may be
impacted favorably or unfavorably by changes in profit booking
rates on the company's contracts. Increases in profit booking
rates, typically referred to as favorable profit adjustments,
usually relate to revisions in the estimated total costs to fulfill
the performance obligations that reflect improved conditions on a
particular contract. Conversely, conditions on a particular
contract may deteriorate, resulting in an increase in the estimated
total costs to fulfill the performance obligations and a reduction
in the profit booking rate and are typically referred to as
unfavorable profit adjustments. Increases or decreases in profit
booking rates are recognized in the current period and reflect the
inception-to-date effect of such changes. For more information on
factors impacting comparability of our segment sales, operating
profit and operating margins, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the
company's Annual Report on Form 10-K for the year ended
Dec. 31, 2021.
The company's consolidated net adjustments not related to
volume, including net profit booking rate adjustments, represented
approximately 24% of total segment operating profit in the first
quarter of 2022, as compared to 28% in the first quarter of
2021.
Aeronautics
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
27,
2022
|
|
March
28,
2021
|
|
|
Net
sales
|
|
$
6,401
|
|
$
6,387
|
|
|
Operating
profit
|
|
679
|
|
693
|
|
|
Operating
margin
|
|
10.6%
|
|
10.9%
|
|
Aeronautics' net sales during the first quarter of 2022 were
comparable to the same period in 2021. Net sales increased by
approximately $80 million for the
F-16 program due to higher volume on production contracts that was
partially offset by an unfavorable profit adjustment on a
modernization contract. This increase was offset by lower net sales
of approximately $65 million for the
F-35 program due to lower net favorable profit adjustments and
volume on production contracts that were partially offset by an
unfavorable profit adjustment on a development contract in the
first quarter of 2021 that did not recur in the first quarter of
2022.
Aeronautics' operating profit during the first quarter of 2022
decreased $14 million, or 2%, compared to the same period in
2021. The decrease was primarily attributable to lower operating
profit of approximately $50 million
for the F-35 program due to lower net favorable profit adjustments
and volume on production contracts that were partially offset by an
unfavorable profit adjustment on a development contract in the
first quarter of 2021 that did not recur in the first quarter of
2022; and about $25 million for the
F-16 program due to an unfavorable profit adjustment on a
modernization contract. These decreases were partially offset by an
increase of approximately $30 million
for the F-22 program due to higher net favorable profit
adjustments; and about $20 million
for classified contracts due to higher net favorable profit
adjustments. Adjustments not related to volume, including net
profit booking rate adjustments, were $25
million lower in the first quarter of 2022 compared to
the same period in 2021.
Missiles and Fire Control
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
27,
2022
|
|
March
28,
2021
|
|
|
Net
sales
|
|
$
2,452
|
|
$
2,749
|
|
|
Operating
profit
|
|
384
|
|
396
|
|
|
Operating
margin
|
|
15.7%
|
|
14.4%
|
|
MFC's net sales during the first quarter of 2022 decreased
$297 million, or 11%, compared to the same period in 2021. The
decrease was primarily attributable to lower net sales of
approximately $115 million for
integrated air and missile defense programs due to lower volume and
net favorable profit adjustments (Terminal High Altitude Area
Defense (THAAD) and Patriot Advanced Capability-3 (PAC-3)); about
$80 million for tactical and strike
missile programs due to lower volume (air dominance weapon systems,
Army Tactical Missile System (ATACMS) and hypersonics); and
approximately $75 million for sensors
and global sustainment programs due to lower volume (Special
Operations Forces Global Logistics Support Services (SOF GLSS) and
lower volume and net favorable profit adjustments on Sniper
Advanced Targeting Pod (SNIPER®)), partially offset by
the effect of a favorable profit adjustment on an international
program as a result of a requirements modification in the first
quarter of 2022.
MFC's operating profit during the first quarter of 2022
decreased $12 million, or 3%, compared to the same period in
2021. The decrease was primarily attributable to lower operating
profit of approximately $45 million
for integrated air and missile defense programs due to lower net
favorable profit adjustments and volume (THAAD and PAC-3), and
about $10 million for tactical and
strike missile programs due to lower volume (ATACMS and
hypersonics). These decreases were partially offset by an increase
of about $50 million for sensors and
global sustainment programs primarily due to the effect of a
favorable profit adjustment on an international program described
above, partially offset by lower net favorable profit adjustments
(SNIPER). Adjustments not related to volume, including net profit
booking rate adjustments, were $15
million higher in the first quarter of 2022 compared to the
same period in 2021.
Rotary and Mission Systems
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
27,
2022
|
|
March
28,
2021
|
|
|
Net
sales
|
|
$
3,552
|
|
$
4,107
|
|
|
Operating
profit
|
|
348
|
|
433
|
|
|
Operating
margin
|
|
9.8%
|
|
10.5%
|
|
RMS' net sales during the first quarter of 2022 decreased
$555 million, or 14%, compared to the same period in 2021. The
decrease was primarily attributable to lower net sales of
approximately $315 million for
training and logistics solutions (TLS) programs primarily due to
the delivery of an international pilot training system in the first
quarter of 2021 that did not recur in the first quarter of 2022;
about $150 million for integrated
warfare systems and sensors (IWSS) programs due to lower volume
(Littoral Combat Ship (LCS), TPQ-53, and Aegis); approximately
$50 million for various C6ISR
(command, control, communications, computers, cyber, combat
systems, intelligence, surveillance, and reconnaissance) programs
due to lower volume; and approximately $40
million for Sikorsky helicopter programs due to lower
production volume on the Black Hawk and VH-92A programs that was
partially offset by higher production volume on the Combat Rescue
Helicopter (CRH), Seahawk and CH-53K programs.
RMS' operating profit during the first quarter of 2022
decreased $85 million, or 20%, compared to the same
period in 2021. The decrease was primarily attributable to
approximately $35 million for various
C6ISR programs due to lower net favorable profit adjustments, about
$30 million for IWSS programs due to
lower net favorable profit adjustments (Aegis); and
approximately $15 million for
Sikorsky helicopter programs due to lower net favorable profit
adjustments (Black Hawk). Operating profit for TLS programs was
comparable due to the delivery of an international pilot training
system in the first quarter of 2021 that did not recur in the first
quarter of 2022, offset by higher net favorable profit
adjustments on various other programs. Adjustments not related
to volume, including net profit booking rate adjustments, were
$55 million lower in the first
quarter of 2022 compared to the same period in 2021.
Space
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
27,
2022
|
|
March
28,
2021
|
|
|
Net
sales
|
|
$
2,559
|
|
$
3,015
|
|
|
Operating
profit
|
|
245
|
|
227
|
|
|
Operating
margin
|
|
9.6%
|
|
7.5%
|
|
Space's net sales during the first quarter of 2022 decreased
$456 million, or 15%, compared to the same period in 2021. The
decrease was primarily attributable to lower net sales of
approximately $440 million due to the
previously announced renationalization of the Atomic Weapons
Establishment (AWE) program on June 30,
2021, which was no longer included in the company's
financial results beginning in the third quarter of 2021; and about
$95 million for commercial civil
space programs due to lower volume (Orion and human lander system
(HLS) programs). These decreases were partially offset by higher
net sales of about $100 million for
strategic and missile defense programs due to higher development
volume (Next Generation Interceptor (NGI)).
Space's operating profit during the first quarter of 2022
increased $18 million, or 8%, compared to the same period in
2021. The increase was primarily attributable to approximately
$35 million of higher equity earnings
from the company's investment in United Launch Alliance (ULA)
driven by higher launch volume. This increase was partially offset
by a decrease of approximately $30
million for commercial civil space programs due to lower net
favorable profit adjustments and volume (the HLS program).
Operating profit for the AWE program was comparable as its
operating profit in the first quarter of 2021 was mostly offset by
accelerated amortization expense for intangible assets as a result
of the renationalization. Adjustments not related to volume,
including net profit booking rate adjustments, were $25 million lower in the first quarter of 2022
compared to the same period in 2021.
Total equity earnings/(losses) (primarily ULA) represented
approximately $30 million, or 12%, of
Space's operating profit in the first quarter of 2022, compared to
approximately $(5) million, or (2)%, in the first quarter of
2021.
Income Taxes
The company's effective income tax rate was 15.9% and 16.9% for
the quarters ended March 27, 2022 and March 28,
2021. The rate for the first quarter of 2022 is lower due to
increased tax deductions for employee equity awards and foreign
derived intangible income compared to the first quarter of
2021. The rates for both periods also benefited from the
research and development tax credit and dividends paid to the
corporation's defined contribution plans with an employee stock
ownership plan feature.
Use of Non-GAAP Financial Measures
This news release contains the following non-generally accepted
accounting principles (non-GAAP) financial measures (as defined by
U.S. Securities and Exchange Commission (SEC) Regulation G). While
management believes that these non-GAAP financial measures may be
useful in evaluating the financial performance of the company, this
information should be considered supplemental to, and not a
substitute for, financial information prepared in accordance with
GAAP. In addition, the company's definitions for non-GAAP financial
measures may differ from similarly titled measures used by other
companies or analysts.
Business segment operating profit
Business segment operating profit represents operating profit
from the company's business segments before unallocated income and
expense. This measure is used by the company's senior management in
evaluating the performance of its business segments and is a
performance goal in the company's annual incentive plan. Business
segment operating margin is calculated by dividing business segment
operating profit by sales. The table below reconciles the non-GAAP
measure business segment operating profit with the most directly
comparable GAAP financial measure, consolidated operating
profit.
|
(in
millions)
|
|
Current 2022
Outlook
|
|
|
|
Business segment
operating profit (non-GAAP)
|
|
~$7,175
|
|
|
|
FAS/CAS operating
adjustment1
|
|
~1,705
|
|
|
|
Other, net
|
|
~(500)
|
|
|
|
Consolidated
operating profit (GAAP)
|
|
~$8,380
|
|
|
|
|
|
|
|
|
1
|
Reflects the amount
by which expected total CAS pension cost of $1.8 billion, exceeds
the expected FAS pension service cost of $95 million. Excludes $555
million of expected non-service FAS pension income. Refer to the
supplemental table "Selected Financial Data" included in this news
release for a detail of the FAS/CAS operating
adjustment.
|
|
|
|
|
Free cash flow
Free cash flow is cash from operations less capital
expenditures. The company's capital expenditures are comprised of
equipment and facilities infrastructure and information technology
(inclusive of costs for the development or purchase of internal-use
software). The company uses free cash flow to evaluate its business
performance and overall liquidity and is a performance goal in the
company's annual and long-term incentive plans. The company
believes free cash flow is a useful measure for investors because
it represents the amount of cash generated from operations after
reinvesting in the business and that may be available to return to
stockholders and creditors (through dividends, stock repurchase and
debt repayments) or available to fund acquisitions. The entire free
cash flow amount is not necessarily available for discretionary
expenditures, however, because it does not account for certain
mandatory expenditures, such as the repayment of maturing debt.
Total FAS/CAS pension adjustment – adjusted
Total FAS/CAS pension adjustment for 2021 is used in one of the
supplemental tables to this release. It has been adjusted for a
noncash, non-operating pension settlement charge of $1.7 billion recognized in the third quarter of
2021. Management believes that the exclusion of the pension
settlement charge related to the accelerated recognition of
actuarial losses previously included in accumulated other
comprehensive loss for certain pension plans as a result of the
purchase of group annuity contracts from an insurance company, is
useful to understanding the company's underlying business
performance and comparing performance from period to period.
Conference Call Information
Lockheed Martin Corporation will webcast live the earnings
results conference call (listen-only mode) on Tuesday, April 19, 2022, at 11 a.m. ET. The live webcast and relevant
financial charts will be available for download on the Lockheed
Martin Investor Relations website at
www.lockheedmartin.com/investor.
For additional information, visit the company's website:
www.lockheedmartin.com.
About Lockheed Martin
Headquartered in Bethesda,
Maryland, Lockheed Martin Corporation is a global security
and aerospace company that employs approximately 114,000 people
worldwide and is principally engaged in the research, design,
development, manufacture, integration and sustainment of advanced
technology systems, products and services.
Forward-Looking Statements
This news release contains statements that, to the extent they
are not recitations of historical fact, constitute forward-looking
statements within the meaning of the federal securities laws, and
are based on Lockheed Martin's current expectations and
assumptions. The words "believe," "estimate," "anticipate,"
"project," "intend," "expect," "plan," "outlook," "scheduled,"
"forecast" and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of
future performance and are subject to risks and uncertainties.
Actual results may differ materially due to factors such as:
- the impact of COVID-19 or future epidemics on the company's
business, including supply chain disruptions and delays, labor
challenges associated with employee absences, travel restrictions,
site access, program delays, changes in customer payment policies
and the impacts of potential vaccine mandates or other
requirements;
- budget uncertainty, the risk of future budget cuts, the debt
ceiling and the potential for government shutdowns and changing
funding and acquisition priorities;
- the company's reliance on contracts with the U.S. Government,
which are dependent on U.S. Government funding and can be
terminated for convenience, and the company's ability to negotiate
favorable contract terms;
- risks related to the development, production, sustainment,
performance, schedule, cost and requirements of complex and
technologically advanced programs, including the F-35 program;
- planned production rates and orders for significant programs,
compliance with stringent performance and reliability standards,
and materials availability;
- performance and financial viability of key suppliers,
teammates, joint ventures and partners, subcontractors and
customers;
- economic, industry, business and political conditions including
their effects on governmental policy and government actions that
disrupt the company's supply chain or prevent the sale or delivery
of its products (such as delays in approvals for exports requiring
Congressional notification);
- trade policies or sanctions (including potential Chinese
sanctions on the company or its suppliers, teammates or partners,
U.S. Government sanctions on Turkey and its removal from the F-35 program,
and potential indirect effects of sanctions on Russia);
- the company's success expanding into and doing business in
adjacent markets and internationally and the differing risks posed
by international sales;
- changes in foreign national priorities and foreign government
budgets and planned orders;
- the competitive environment for the company's products and
services, including competition from emerging competitors including
startups and non-traditional defense contractors;
- the timing of contract awards as well as the timing and
customer acceptance of product deliveries and performance
milestones;
- the company's ability to develop new technologies and products,
including emerging digital and network technologies and
capabilities;
- the company's ability to attract and retain a highly skilled
workforce, the impact of work stoppages or other labor
disruptions;
- cyber or other security threats or other disruptions faced by
the company or its suppliers;
- the company's ability to implement and continue, and the timing
and impact of, capitalization changes such as share repurchases,
dividend payments and financing transactions;
- the company's ability to recover costs under U.S. Government
contracts, the mix of fixed-price and cost-reimbursable contracts,
and the impacts of cost overruns and significant increases in
inflation;
- the accuracy of the company's estimates and projections;
- the impact of pension risk transfers, including potential
noncash settlement charges, timing and estimates regarding pension
funding and movements in interest rates and other changes that may
affect pension plan assumptions, stockholders' equity, the level of
the FAS/CAS adjustment, and actual returns on pension plan assets
and the impact of pension related legislation;
- realizing the anticipated benefits of acquisitions or
divestitures, investments, joint ventures, teaming arrangements or
internal reorganizations, and market volatility affecting the fair
value of investments in the company's Lockheed Martin Ventures Fund
that are marked to market;
- the company's efforts to increase the efficiency of its
operations and improve the affordability of its products and
services;
- the risk of an impairment of the company's assets, including
the potential impairment of goodwill recorded at the Sikorsky line
of business;
- the availability and adequacy of the company's insurance and
indemnities;
- the company's ability to benefit fully from or adequately
protect its intellectual property rights;
- procurement and other regulations and policies affecting the
company's industry, export of its products, cost allowability or
recovery, preferred contract type, and performance and progress
payments policy;
- climate change and changes to laws, regulations, policies,
markets and customer requirements in response to climate change
concerns;
- changes in accounting, U.S. or foreign tax, export or other
laws, regulations, and policies and their interpretation or
application; and
- the outcome of legal proceedings, bid protests, environmental
remediation efforts, audits, government investigations or
government allegations that the company has failed to comply with
law, other contingencies and U.S. Government identification of
deficiencies in its business systems.
These are only some of the factors that may affect the
forward-looking statements contained in this news release. For a
discussion identifying additional important factors that could
cause actual results to differ materially from those anticipated in
the forward-looking statements, see the company's filings with the
U.S. Securities and Exchange Commission including, but not limited
to, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Risk Factors" in the company's
Annual Report on Form 10-K for the year ended
Dec. 31, 2021 and subsequent quarterly reports on Form
10-Q. The company's filings may be accessed through the Investor
Relations page of its website, www.lockheedmartin.com/investor, or
through the website maintained by the SEC at www.sec.gov.
The company's actual financial results likely will be different
from those projected due to the inherent nature of projections.
Given these uncertainties, forward-looking statements should not be
relied on in making investment decisions. The forward-looking
statements contained in this news release speak only as of the date
of its filing. Except where required by applicable law, the company
expressly disclaims a duty to provide updates to forward-looking
statements after the date of this news release to reflect
subsequent events, changed circumstances, changes in expectations,
or the estimates and assumptions associated with them. The
forward-looking statements in this news release are intended to be
subject to the safe harbor protection provided by the federal
securities laws.
Lockheed Martin
Corporation Consolidated Statements of
Earnings1 (unaudited; in millions, except
per share data)
|
|
|
|
|
Quarters
Ended
|
|
|
|
March
27,
2022
|
|
March
28,
2021
|
|
Net
sales
|
|
$
14,964
|
|
$
16,258
|
|
Cost of
sales2,3
|
|
(13,055)
|
|
(14,072)
|
|
Gross
profit
|
|
1,909
|
|
2,186
|
|
Other income
(expense), net
|
|
24
|
|
(4)
|
|
Operating
profit
|
|
1,933
|
|
2,182
|
|
Interest
expense
|
|
(135)
|
|
(140)
|
|
Non-service FAS
pension income
|
|
140
|
|
93
|
|
Other non-operating
income, net4
|
|
123
|
|
76
|
|
Earnings before
income taxes
|
|
2,061
|
|
2,211
|
|
Income tax
expense
|
|
(328)
|
|
(374)
|
|
Net
earnings
|
|
$
1,733
|
|
$
1,837
|
|
Effective tax
rate
|
|
15.9%
|
|
16.9%
|
|
|
|
|
|
|
|
Earnings per
common share
|
|
|
|
|
|
Basic
|
|
$
6.46
|
|
$
6.58
|
|
Diluted
|
|
$
6.44
|
|
$
6.56
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
Basic
|
|
268.3
|
|
279.0
|
|
Diluted
|
|
269.2
|
|
280.0
|
|
|
|
|
|
|
|
Common shares
reported in stockholders' equity at end of period
|
|
265
|
|
278
|
|
|
|
|
|
|
1
|
The corporation
closes its books and records on the last Sunday of the calendar
quarter to align its financial closing with its business processes,
which was on March 27 for the first quarter of 2022 and March 28
for the first quarter of 2021. The consolidated financial
statements and tables of financial information included herein are
labeled based on that convention. This practice only affects
interim periods, as the corporation's fiscal year ends on
Dec. 31.
|
2
|
In the first quarter
of 2022 and 2021, the company recognized losses of $101 million
($76 million, or $0.28 per share, after-tax) and $10 million ($8
million, or $0.03 per share, after-tax) due to declines in the fair
value of investments held in a trust for deferred compensation
plans.
|
3
|
In the first quarter
of 2021, the company recognized severance and restructuring charges
of $36 million ($28 million, or $0.10 per share, after-tax) for
previously announced actions at the company's RMS business
segment.
|
4
|
Other non-operating
income, net for the first quarter of 2022 and 2021 include net
gains of $103 million ($77 million, or $0.29 per share,
after-tax) and $68 million ($51 million, or $0.18 per share,
after-tax) due to increases in the fair value of investments held
in the Lockheed Martin Ventures Fund.
|
|
|
Lockheed Martin
Corporation Business Segment Summary Operating
Results (unaudited; in millions)
|
|
|
|
|
Quarters
Ended
|
|
|
|
|
|
March 27,
2022
|
|
March 28,
2021
|
|
%
Change
|
|
Net
sales
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
6,401
|
|
$
6,387
|
|
—%
|
|
Missiles and Fire
Control
|
|
2,452
|
|
2,749
|
|
(11%)
|
|
Rotary and Mission
Systems
|
|
3,552
|
|
4,107
|
|
(14%)
|
|
Space
|
|
2,559
|
|
3,015
|
|
(15%)
|
|
Total net
sales
|
|
$
14,964
|
|
$
16,258
|
|
(8%)
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
679
|
|
$
693
|
|
(2%)
|
|
Missiles and Fire
Control
|
|
384
|
|
396
|
|
(3%)
|
|
Rotary and Mission
Systems
|
|
348
|
|
433
|
|
(20%)
|
|
Space
|
|
245
|
|
227
|
|
8%
|
|
Total business
segment operating profit
|
|
1,656
|
|
1,749
|
|
(5%)
|
|
Unallocated
items
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
426
|
|
489
|
|
|
|
Severance and
restructuring charges1
|
|
—
|
|
(36)
|
|
|
|
Other,
net2
|
|
(149)
|
|
(20)
|
|
|
|
Total unallocated
items
|
|
277
|
|
433
|
|
(36%)
|
|
Total consolidated
operating profit
|
|
$
1,933
|
|
$
2,182
|
|
(11%)
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
Aeronautics
|
|
10.6%
|
|
10.9%
|
|
|
|
Missiles and Fire
Control
|
|
15.7%
|
|
14.4%
|
|
|
|
Rotary and Mission
Systems
|
|
9.8%
|
|
10.5%
|
|
|
|
Space
|
|
9.6%
|
|
7.5%
|
|
|
|
Total business
segment operating margin
|
|
11.1%
|
|
10.8%
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
operating margin
|
|
12.9%
|
|
13.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
In the first quarter
of 2021, the company recognized severance and restructuring charges
of $36 million ($28 million, or $0.10 per share, after-tax) for
previously announced actions at the company's RMS business
segment.
|
2
|
In the first quarter
of 2022 and 2021, the company recognized losses of $101 million
($76 million, or $0.28 per share, after-tax) and $10 million ($8
million, or $0.03 per share, after-tax) due to declines in the fair
value of investments held in a trust for deferred compensation
plans.
|
|
|
|
|
|
|
|
|
Lockheed Martin
Corporation Selected Financial Data (unaudited;
in millions)
|
|
|
|
|
Quarters
Ended
|
|
|
|
March 27,
2022
|
|
March 28,
2021
|
|
Amortization of
purchased intangibles
|
|
|
|
|
|
Aeronautics
|
|
$
—
|
|
$
—
|
|
Missiles and Fire
Control
|
|
1
|
|
1
|
|
Rotary and Mission
Systems
|
|
58
|
|
58
|
|
Space
|
|
3
|
|
22
|
|
Total amortization
of purchased intangibles
|
|
$
62
|
|
$
81
|
|
|
|
2022
Outlook
|
|
2021
Actual
|
|
Total FAS income
(expense) and CAS cost
|
|
|
|
|
|
Total FAS pension
income (expense)
|
|
$
460
|
|
$
(1,398)
|
|
Less: CAS pension
cost
|
|
1,800
|
|
2,066
|
|
Total FAS/CAS pension
adjustment
|
|
2,260
|
|
668
|
|
Less: pension
settlement charge
|
|
—
|
|
1,665
|
|
Total FAS/CAS pension
adjustment - adjusted1,2
|
|
$
2,260
|
|
$
2,333
|
|
|
|
|
|
|
|
Service and
non-service cost reconciliation
|
|
|
|
|
|
FAS pension service
cost
|
|
$
(95)
|
|
$
(106)
|
|
Less: CAS pension
cost
|
|
1,800
|
|
2,066
|
|
FAS/CAS operating
adjustment
|
|
1,705
|
|
1,960
|
|
FAS pension non-service
income (expense)
|
|
555
|
|
(1,292)
|
|
Total FAS/CAS pension
adjustment
|
|
2,260
|
|
668
|
|
Less: pension
settlement charge
|
|
—
|
|
1,665
|
|
Total FAS/CAS pension
adjustment - adjusted1,2
|
|
$
2,260
|
|
$
2,333
|
|
|
|
|
|
|
1
|
Total FAS/CAS pension
adjustment – adjusted is a non-GAAP measure. See the "Use of
Non-GAAP Financial Measures" section of this news release for more
information.
|
2
|
The cost components
in the table above relate only to the company's qualified defined
benefit pension plans. The company
recognized a noncash,
non-operating settlement charge of $1,665 million in the third
quarter of 2021 related to the accelerated recognition
of
actuarial losses
previously included in accumulated other comprehensive loss for
certain pension plans as a result of the purchase of
group
annuity contracts
from an insurance company.
|
Lockheed Martin
Corporation Consolidated Balance
Sheets (unaudited, in millions, except par
value)
|
|
|
|
|
March
27,
2022
|
|
Dec.
31,
2021
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,883
|
|
$
3,604
|
|
Receivables,
net
|
|
2,527
|
|
1,963
|
|
Contract
assets
|
|
12,130
|
|
10,579
|
|
Inventories
|
|
3,144
|
|
2,981
|
|
Other current
assets
|
|
706
|
|
688
|
|
Total current
assets
|
|
20,390
|
|
19,815
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
7,561
|
|
7,597
|
|
Goodwill
|
|
10,811
|
|
10,813
|
|
Intangible assets,
net
|
|
2,644
|
|
2,706
|
|
Deferred income
taxes
|
|
2,688
|
|
2,290
|
|
Other noncurrent
assets
|
|
7,416
|
|
7,652
|
|
Total
assets
|
|
$
51,510
|
|
$
50,873
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
2,599
|
|
$
780
|
|
Salaries, benefits and
payroll taxes
|
|
2,671
|
|
3,108
|
|
Contract
liabilities
|
|
7,902
|
|
8,107
|
|
Current maturities of
long-term debt
|
|
500
|
|
6
|
|
Other current
liabilities
|
|
2,375
|
|
1,996
|
|
Total current
liabilities
|
|
16,047
|
|
13,997
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
11,145
|
|
11,670
|
|
Accrued pension
liabilities
|
|
8,143
|
|
8,319
|
|
Other noncurrent
liabilities
|
|
6,173
|
|
5,928
|
|
Total
liabilities
|
|
41,508
|
|
39,914
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Common stock, $1 par
value per share
|
|
265
|
|
271
|
|
Additional paid-in
capital
|
|
—
|
|
94
|
|
Retained
earnings
|
|
20,716
|
|
21,600
|
|
Accumulated other
comprehensive loss
|
|
(10,979)
|
|
(11,006)
|
|
Total stockholders'
equity
|
|
10,002
|
|
10,959
|
|
Total liabilities and
equity
|
|
$
51,510
|
|
$
50,873
|
|
|
|
|
|
|
Lockheed Martin
Corporation Consolidated Statements of Cash
Flows (unaudited; in millions)
|
|
|
|
Quarters
Ended
|
|
|
March 27,
2022
|
|
March 28,
2021
|
Operating
activities
|
|
|
|
|
Net
earnings
|
|
$
1,733
|
|
$
1,837
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
|
Depreciation and
amortization
|
|
329
|
|
336
|
Stock-based
compensation
|
|
54
|
|
47
|
Deferred income
taxes
|
|
(411)
|
|
63
|
Severance and
restructuring charges
|
|
—
|
|
36
|
Changes in assets and
liabilities
|
|
|
|
|
Receivables,
net
|
|
(564)
|
|
(236)
|
Contract
assets
|
|
(1,551)
|
|
(1,363)
|
Inventories
|
|
(163)
|
|
289
|
Accounts
payable
|
|
1,829
|
|
1,023
|
Contract
liabilities
|
|
(205)
|
|
(290)
|
Income
taxes
|
|
697
|
|
301
|
Qualified defined
benefit pension plans
|
|
(116)
|
|
(66)
|
Other, net
|
|
(222)
|
|
(229)
|
Net cash provided
by operating activities
|
|
1,410
|
|
1,748
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(268)
|
|
(281)
|
Other, net
|
|
17
|
|
112
|
Net cash used for
investing activities
|
|
(251)
|
|
(169)
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Repurchases of common
stock
|
|
(2,000)
|
|
(1,000)
|
Dividends
paid
|
|
(767)
|
|
(739)
|
Other, net
|
|
(113)
|
|
(67)
|
Net cash used for
financing activities
|
|
(2,880)
|
|
(1,806)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
(1,721)
|
|
(227)
|
Cash and cash
equivalents at beginning of period
|
|
3,604
|
|
3,160
|
Cash and cash
equivalents at end of period
|
|
$
1,883
|
|
$
2,933
|
|
|
|
|
|
Lockheed Martin
Corporation Other Financial and Operating
Information (unaudited; in millions, except for
aircraft deliveries and weeks)
|
|
|
Backlog
|
|
March
27,
2022
|
|
Dec.
31,
2021
|
|
Aeronautics
|
|
$
46,116
|
|
$
49,118
|
|
Missiles and Fire
Control
|
|
26,262
|
|
27,021
|
|
Rotary and Mission
Systems
|
|
34,256
|
|
33,700
|
|
Space
|
|
27,596
|
|
25,516
|
|
Total
backlog
|
|
$
134,230
|
|
$
135,355
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Aircraft
Deliveries
|
|
March 27,
2022
|
|
March 28,
2021
|
|
F-35
|
|
26
|
|
17
|
|
C-130J
|
|
5
|
|
2
|
|
Government helicopter
programs
|
|
17
|
|
15
|
|
Commercial helicopter
programs
|
|
—
|
|
1
|
|
International
military helicopter programs
|
|
—
|
|
1
|
|
Number of Weeks in
Reporting Period1
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2022
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2021
|
|
First
quarter
|
|
12
|
|
12
|
|
Second
quarter
|
|
13
|
|
13
|
|
Third
quarter
|
|
13
|
|
13
|
|
Fourth
quarter
|
|
14
|
|
14
|
|
|
|
|
|
|
1
|
Calendar quarters are
typically comprised of 13 weeks. However, the company closes its
books and records on the last Sunday of each month, except for the
month of Dec., as its fiscal year ends on Dec. 31. As a result, the
number of weeks in a reporting quarter may vary slightly during the
year and for comparable prior year periods.
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SOURCE Lockheed Martin