- Net sales of $15.4
billion
- Net earnings of $309 million,
or $1.16 per share, inclusive of
non-operational charges of $1.7
billion ($1.4 billion, or
$5.16 per share, after-tax)
- Cash from operations of $1.3
billion and free cash flow of $1.0
billion
- Returned $1.1 billion of cash
to shareholders through share repurchases and dividends
- Updates 2022 outlook for sales and earnings per share;
maintains 2022 outlook for segment operating profit, cash from
operations, and free cash flow
BETHESDA, Md., July 19,
2022 /PRNewswire/ -- Lockheed Martin Corporation
[NYSE: LMT] today reported second quarter 2022 net sales of
$15.4 billion, compared to
$17.0 billion in the second quarter
of 2021. Net earnings in the second quarter of 2022 were
$309 million, or $1.16 per share, compared to $1.8 billion, or $6.52 per share, in the second quarter of
2021. Cash from operations was $1.3 billion in both the second quarter of
2022 and 2021. Free cash flow was $1.0 billion in both the second quarter of
2022 and 2021.
"Lockheed Martin continued to deliver strong and consistent cash
generation, returning over $1 billion
in cash to shareholders in the second quarter through our industry
leading dividend and our ongoing share repurchase program," said
Lockheed Martin Chairman, President and CEO James Taiclet. "Although revenue in the period
was affected by supply chain impacts and the timing of customer
contract negotiations, our cost management initiatives resulted in
margin expansion. Moreover, our robust cash generation also
continues to provide the resources to invest in building the
foundation for future revenue and margin growth opportunities
through our classified program capex projects, hypersonics
development efforts, and our 21st Century Security and internal
Digital Transformation initiatives."
Net earnings for the quarter ended June
26, 2022 included non-operational charges totaling
$1.7 billion ($1.4 billion, or $5.16 per share, after-tax). The table below
shows the impact to earnings before income taxes, net earnings and
diluted earnings per share (EPS) for these items.
Adjusted earnings before income taxes; Adjusted net earnings
and adjusted diluted EPS
The table below shows the impact to earnings before income
taxes, net earnings and diluted earnings per share (EPS) for
certain non-operational charges:
|
(in millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
June 26, 2022
|
|
Quarter Ended
June 27, 2021
|
|
|
|
|
Earnings
Before
Income
Taxes
|
Net
Earnings
|
Diluted
EPS
|
|
Earnings
Before
Income
Taxes
|
Net
Earnings
|
Diluted
EPS
|
|
|
As Reported
(GAAP)
|
|
$
330
|
$
309
|
$
1.16
|
|
$ 2,170
|
$ 1,815
|
$ 6.52
|
|
|
Pension settlement
charge
|
|
1,470
|
1,156
|
4.33
|
|
—
|
—
|
—
|
|
|
Lockheed Martin
Ventures investment
losses
(gains)
|
|
143
|
107
|
0.40
|
|
(14)
|
(11)
|
(0.04)
|
|
|
Losses (gains) on
assets in trust for
deferred
compensation obligations
|
|
61
|
46
|
0.17
|
|
(24)
|
(18)
|
(0.06)
|
|
|
Debt refinancing
transaction
|
|
34
|
26
|
0.10
|
|
—
|
—
|
—
|
|
|
Change in effective tax
rate1
|
|
N/A
|
41
|
0.16
|
|
N/A
|
—
|
—
|
|
|
Total
Adjustments
|
|
1,708
|
1,376
|
5.16
|
|
(38)
|
(29)
|
(0.10)
|
|
|
As Adjusted
(Non-GAAP)2
|
|
$ 2,038
|
$ 1,685
|
$
6.32
|
|
$ 2,132
|
$ 1,786
|
$ 6.42
|
|
|
|
|
|
|
|
|
1
|
Represents the impact
of the change in the estimated annual effective tax rate primarily
due to lower earnings before income taxes
associated with the pension settlement charge, which will be
realized in the third and fourth quarters of 2022.
|
|
2
|
See the "Use of
Non-GAAP Financial Measures" section of this news release for more
information.
|
|
|
|
|
Summary Financial Results
The following table presents the company's summary financial
results.
|
(in millions,
except per share data)
|
|
Quarters
Ended1
|
|
Six Months
Ended1
|
|
|
|
|
June
26,
2022
|
|
June
27,
2021
|
|
June
26,
2022
|
|
June
27,
2021
|
|
|
Net
sales
|
|
$
15,446
|
|
$
17,029
|
|
$
30,410
|
|
$
33,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit2,3
|
|
$
1,701
|
|
$
1,766
|
|
$
3,357
|
|
$
3,515
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
425
|
|
489
|
|
851
|
|
978
|
|
|
Severance and
restructuring charges
|
|
—
|
|
—
|
|
—
|
|
(36)
|
|
|
Other,
net4
|
|
(163)
|
|
(63)
|
|
(312)
|
|
(83)
|
|
|
Total unallocated
items
|
|
262
|
|
426
|
|
539
|
|
859
|
|
|
Consolidated
operating profit
|
|
$
1,963
|
|
$
2,192
|
|
$
3,896
|
|
$
4,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings3,5
|
|
$
309
|
|
$
1,815
|
|
$
2,042
|
|
$
3,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share3,5
|
|
$
1.16
|
|
$
6.52
|
|
$
7.62
|
|
$
13.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from
operations
|
|
$
1,331
|
|
$
1,268
|
|
$
2,741
|
|
$
3,016
|
|
|
Capital
expenditures
|
|
(304)
|
|
(318)
|
|
(572)
|
|
(599)
|
|
|
Free cash
flow2
|
|
$
1,027
|
|
$
950
|
|
$
2,169
|
|
$
2,417
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
The company 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 June 26 for the second quarter of 2022 and
June 27 for the second 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 company'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
|
During the quarter
ended June 27, 2021, the company recorded a loss of $225 million
($169 million, or $0.61 per share, after-tax) at its
Aeronautics business segment as a result of performance issues on a
classified program.
|
|
4
|
Other, net for the
quarters ended June 26, 2022 and June 27, 2021 include net losses
of $61 million ($46 million, or $0.17 per share,
after-tax) and net gains of $24 million ($18 million, or $0.06 per
share, after-tax) due to changes in the fair value of investments
held in a
trust for deferred compensation plans. See prior table.
|
|
5
|
Net earnings for the
quarter ended June 26, 2022 include certain non-operational charges
of $1.7 billion ($1.4 billion, or $5.16 per share,
after-tax). See prior table for further details.
|
|
|
|
|
|
|
|
F-35 Lots 15-17 Contract Update
The company recently reached an agreement in principle with the
U.S. Government on the F-35 Low Rate Initial Production (LRIP) Lots
15-17 production contract and continues to engage with the U.S.
Government to definitize the contract. The company has been
performing work on the Lots 15-17 production under customer
authorization and initial funding to begin work under an advance
acquisition contract received in December
2019. The company's costs began to exceed the contract value
and available funding on the Lots 15-17 advance acquisition
contract in the second quarter of 2022. As a result, this prevented
the recognition of approximately $325
million of sales and associated operating profit in the
second quarter. Additionally, it prevented the company from
invoicing and receiving cash of approximately $465 million for costs incurred in the second
quarter of 2022. At the end of the second quarter of 2022, the
company also had approximately $1
billion in potential termination liability exposure to third
parties related to LRIP Lots 15-17. The company expects to recover
the unrecognized sales and resume invoicing costs incurred upon
receiving contractual authorization and funding on the production
contract with the U.S. Government, which it expects to occur in the
third quarter of 2022. However, until a final agreement is reached
or the U.S. Government otherwise provides additional contractual
authorization and funding, the company's results of operations,
cash flows, and financial condition will continue to be negatively
impacted and the impacts could be material.
As part of the LRIP Lots 15-17 production contract, the U.S.
Government reduced the acquisition quantities based on budget
availability. While the company expects the LRIP Lots 15-17
contract to support its long-term objective to produce 156 aircraft
a year, COVID-19 and other impacts experienced by the F-35
enterprise have required it to modify its near-term production
plan. Deliveries are expected to remain in the range of 147-153
aircraft per year in 2023 and 2024, before the company achieves its
156 aircraft delivery target in 2025. The company continues to
anticipate annual deliveries of 156 aircraft beyond 2025 for the
foreseeable future.
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
Update1
|
|
April
20221
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
~$65,250
|
|
~$66,000
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit2
|
|
~$7,175
|
|
~$7,175
|
|
|
|
|
|
|
|
|
|
Total FAS/CAS pension
adjustment3
|
|
~$740
|
|
~$2,260
|
|
|
Add: pension settlement
charge3
|
|
1,470
|
|
N/A
|
|
|
Net FAS/CAS pension
adjustment - adjusted2,3
|
|
~$2,210
|
|
N/A
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
~$21.55
|
|
~$26.70
|
|
|
|
|
|
|
|
|
|
Cash from
operations
|
|
≥$7,900
|
|
≥$7,900
|
|
|
Capital
expenditures
|
|
~$(1,900)
|
|
~$(1,900)
|
|
|
Free cash
flow2
|
|
≥$6,000
|
|
≥$6,000
|
|
|
|
|
|
|
|
|
1
|
The company's current
2022 financial outlook is premised on receiving contractual
authorization and funding on the F-35 Lots 15-17 production
contract in the third quarter of 2022 and does not include any
future gains or losses related to changes in valuations of the
company's net assets held in trust for deferred compensation plans
or the Lockheed Martin Ventures Fund's investments and assumes
continued accelerated payments to suppliers, with a focus on small
and at-risk businesses. In addition, the outlook reflects no
significant reduction in customer budgets or changes in priorities,
continued support and funding of the company's programs, and a
statutory tax rate of 21%. It also includes 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, free cash flow and Net FAS/CAS pension adjustment
– adjusted are non-GAAP measures. See the "Use of
Non-GAAP Financial Measures" section of this news release for more
information.
|
|
3
|
The Net FAS/CAS pension
adjustment - adjusted 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 $410 million, excluding the noncash,
non-operating pension settlement charge of $1.5 billion ($1.2
billion, or $4.33
per share, after-tax) recognized in the quarter ended June 26, 2022
related to the purchase of group annuity contracts to transfer
approximately $4.3 billion of gross pension obligations and related
plan assets to an insurance company. CAS pension cost and the
service
cost component of FAS pension (expense) income are included in
operating profit. The non-service cost components of FAS pension
(expense) 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 quarter ended June 26, 2022 was
$1.3 billion. Capital expenditures
were $304 million, resulting in free cash flow of $1.0 billion. The operating and free cash flows
for the quarter ended June 26, 2022 were comparable to the
same period in 2021.
The company's capital deployment activities in the quarter ended
June 26, 2022 included the following:
- paying cash dividends of $744
million; and
- paying $356 million to repurchase
0.9 million shares (excluding 0.6 million shares received upon
settlement of an accelerated share repurchase agreement (ASR) in
April 2022 for no additional
consideration).
On May 5, 2022, the company
received net proceeds of $2.3 billion
from a debt issuance of senior unsecured notes, consisting of
$800 million aggregate principal
amount of 3.90% Notes due 2032, $850
million aggregate principal amount of 4.15% Notes due 2053,
and $650 million aggregate principal
amount of 4.30% Notes due 2062. The company used the net proceeds
from this debt offering to redeem all of the outstanding
$500 million in aggregate principal amount of its 3.10% Notes
due 2023, $750 million in aggregate principal amount of its
2.90% Notes due 2025, and $1.0 billion of its outstanding $2.0 billion in aggregate principal amount
of its 3.55% Notes due 2026. As a result of these transactions, as
of June 26, 2022, the company's debt
balance remained unchanged. The company incurred a charge of
$34 million ($26 million, or $0.10 per share, after-tax) on these
transactions.
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
|
|
Six Months
Ended
|
|
|
|
|
June
26,
2022
|
|
June
27,
2021
|
|
June
26,
2022
|
|
June
27,
2021
|
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
5,862
|
|
$
6,666
|
|
$
12,263
|
|
$
13,053
|
|
|
Missiles and Fire
Control
|
|
2,747
|
|
2,944
|
|
5,199
|
|
5,693
|
|
|
Rotary and Mission
Systems
|
|
4,012
|
|
4,242
|
|
7,564
|
|
8,349
|
|
|
Space
|
|
2,825
|
|
3,177
|
|
5,384
|
|
6,192
|
|
|
Total net
sales
|
|
$
15,446
|
|
$
17,029
|
|
$
30,410
|
|
$
33,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
612
|
|
$
572
|
|
$
1,291
|
|
$
1,265
|
|
|
Missiles and Fire
Control
|
|
418
|
|
401
|
|
802
|
|
797
|
|
|
Rotary and Mission
Systems
|
|
403
|
|
458
|
|
751
|
|
891
|
|
|
Space
|
|
268
|
|
335
|
|
513
|
|
562
|
|
|
Total business
segment operating profit
|
|
1,701
|
|
1,766
|
|
3,357
|
|
3,515
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
425
|
|
489
|
|
851
|
|
978
|
|
|
Severance and
restructuring charges
|
|
—
|
|
—
|
|
—
|
|
(36)
|
|
|
Other, net
|
|
(163)
|
|
(63)
|
|
(312)
|
|
(83)
|
|
|
Total unallocated
items
|
|
262
|
|
426
|
|
539
|
|
859
|
|
|
Total consolidated
operating profit
|
|
$
1,963
|
|
$
2,192
|
|
$
3,896
|
|
$
4,374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and operating profit of our business segments exclude
intersegment sales, cost of sales, and profit as these activities
are eliminated in consolidation and not included in management's
evaluation of performance of each segment. Business segment
operating profit includes our share of earnings or losses from
equity method investees as the operating activities of the equity
method investees are closely aligned with the operations of our
business segments.
Business segment operating profit excludes the FAS/CAS pension
operating adjustment, a portion of corporate costs not considered
allowable or allocable to contracts with the U.S. Government under
the applicable U.S. Government cost accounting standards (CAS) or
federal acquisition regulations (FAR), and other items not
considered part of management's evaluation of segment operating
performance such as a portion of management and administration
costs, legal fees and settlements, environmental costs, stock-based
compensation expense, retiree benefits, significant severance
actions, significant asset impairments, gains or losses from
divestitures, and other miscellaneous corporate activities.
Excluded items are included in the reconciling item "Unallocated
items" between operating profit from our business segments and our
consolidated operating profit.
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 and subsequent
quarterly reports on Form 10-Q.
The company's consolidated net adjustments not related to
volume, including net profit booking rate adjustments, represented
approximately 27% of total segment operating profit in the quarter
ended June 26, 2022, as compared to 22% in the quarter ended
June 27, 2021.
Aeronautics
|
(in millions)
|
|
Quarters
Ended
|
|
Six Months
Ended
|
|
|
|
|
June
26,
2022
|
|
June
27,
2021
|
|
June
26,
2022
|
|
June
27,
2021
|
|
|
Net
sales
|
|
$ 5,862
|
|
$ 6,666
|
|
$ 12,263
|
|
$ 13,053
|
|
|
Operating
profit
|
|
612
|
|
572
|
|
1,291
|
|
1,265
|
|
|
Operating
margin
|
|
10.4 %
|
|
8.6 %
|
|
10.5 %
|
|
9.7 %
|
|
Aeronautics' net sales during the quarter ended June 26, 2022 decreased $804 million, or 12%, compared to the same period
in 2021. Net sales decreased by approximately $945 million for the F-35 program due to lower
volume on production contracts as a result of supply chain
performance delays and delays in receiving additional contractual
authorization and funding under the Lots 15-17 contract, and about
$50 million on the F-16 program due
to lower volume on sustainment contracts and an unfavorable profit
adjustment on a production contract in the second quarter of 2022
as a result of manufacturing line ramp up delays, partially
offset by higher volume on production contracts. These decreases
were partially offset by an increase of approximately
$210 million on classified contracts
primarily due to higher volume.
Aeronautics' operating profit during the quarter ended
June 26, 2022 increased $40 million, or 7%, compared to
the same period in 2021. Operating profit increased approximately
$220 million on classified contracts
due to a $225 million loss in the
second quarter of 2021 on a classified program; and approximately
$40 million for the F-22 program due
to higher net favorable profit adjustments. These increases were
partially offset by lower operating profit of approximately
$145 million for the F-35 program due
to lower volume on production contracts as described above; and
about $55 million for the F-16
program due to an unfavorable profit adjustment on a production
contract in the second quarter of 2022 as described above.
Adjustments not related to volume, including net profit booking
rate adjustments, were $120 million
higher in the second quarter of 2022 compared to the same
period in 2021.
Missiles and Fire Control
|
(in millions)
|
|
Quarters
Ended
|
|
Six Months
Ended
|
|
|
|
|
June
26,
2022
|
|
June
27,
2021
|
|
June
26,
2022
|
|
June
27,
2021
|
|
|
Net
sales
|
|
$
2,747
|
|
$
2,944
|
|
$
5,199
|
|
$
5,693
|
|
|
Operating
profit
|
|
418
|
|
401
|
|
802
|
|
797
|
|
|
Operating
margin
|
|
15.2 %
|
|
13.6 %
|
|
15.4 %
|
|
14.0 %
|
|
MFC's net sales during the quarter ended June 26, 2022
decreased $197 million, or 7%, compared to the same period in
2021. The decrease was primarily attributable to lower net sales of
approximately $155 million for
sensors and global sustainment programs primarily due to lower
volume on SOF GLSS as a result of troop withdrawals from
Afghanistan and lower net
favorable profit adjustments due to close out activities in the
second quarter of 2021 related to the Warrior Capability
Sustainment Program (Warrior); and about $45
million for tactical and strike missile programs due to
lower volume (air dominance weapon systems).
MFC's operating profit during the quarter ended June 26,
2022 increased $17 million, or 4%, compared to the same period
in 2021. The increase was primarily attributable to higher
operating profit of approximately $40
million for tactical and strike missile programs due to
higher net favorable profit adjustments (Joint Air-to-Surface
Standoff Missile (JASSM), High Mobility Artillery Rocket System
(HIMARS), and Hellfire); and about $10
million for integrated air and missile defense programs due
to higher net favorable profit adjustments (Patriot Advanced
Capability-3 (PAC-3)). These increases were partially offset by a
decrease of about $40 million for
sensors and global sustainment programs primarily due to lower net
favorable profit adjustments as a result of the closeout of the
Warrior program in 2021. In addition, operating margin was
positively impacted when compared to the second quarter of 2021 due
to contract mix (lower SOF GLSS volume and lower development volume
at tactical and strike missiles). Adjustments not related to
volume, including net profit booking rate adjustments in the second
quarter of 2022 were comparable to the same period in 2021.
Rotary and Mission Systems
|
(in millions)
|
|
Quarters
Ended
|
|
Six Months
Ended
|
|
|
|
|
June
26,
2022
|
|
June
27,
2021
|
|
June
26,
2022
|
|
June
27,
2021
|
|
|
Net
sales
|
|
$ 4,012
|
|
$ 4,242
|
|
$
7,564
|
|
$
8,349
|
|
|
Operating
profit
|
|
403
|
|
458
|
|
751
|
|
891
|
|
|
Operating
margin
|
|
10.0 %
|
|
10.8 %
|
|
9.9 %
|
|
10.7 %
|
|
RMS' net sales during the quarter ended June 26, 2022
decreased $230 million, or 5%, compared to the same period in
2021. The decrease was primarily attributable to lower net sales of
approximately $100 million for
Sikorsky helicopter programs due to lower production volume
(Black Hawk); about $80 million for
integrated warfare systems and sensors (IWSS) programs due to lower
volume (Littoral Combat Ship (LCS) and Advanced Hawkeye); and
approximately $55 million for various
C6ISR (command, control, communications, computers, cyber, combat
systems, intelligence, surveillance, and reconnaissance) programs
due to lower volume.
RMS' operating profit during the quarter ended June 26,
2022 decreased $55 million, or 12%, compared to the same
period in 2021. The decrease was primarily attributable to
approximately $20 million for IWSS
programs due to lower net favorable profit adjustments (Aegis and
ground-based radar), about $10
million for various C6ISR programs due to lower volume; and
approximately $10 million for
Sikorsky helicopter programs due to lower production volume (Black
Hawk). Adjustments not related to volume, including net profit
booking rate adjustments, were $25
million lower in the second quarter of 2022 compared to the
same period in 2021.
Space
|
(in millions)
|
|
Quarters
Ended
|
|
Six Months
Ended
|
|
|
|
|
June
26,
2022
|
|
June
27,
2021
|
|
2022
|
|
2021
|
|
|
Net
sales
|
|
$ 2,825
|
|
$ 3,177
|
|
$
5,384
|
|
$
6,192
|
|
|
Operating
profit
|
|
268
|
|
335
|
|
513
|
|
562
|
|
|
Operating
margin
|
|
9.5 %
|
|
10.5 %
|
|
9.5 %
|
|
9.1 %
|
|
Space's net sales during the quarter ended June 26, 2022
decreased $352 million, or 11%, compared to the same period in
2021. The decrease was primarily attributable to lower net sales of
approximately $425 million due to the
previously announced renationalization of the 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 $55
million for commercial civil space programs due to lower
volume (Orion). These decreases were partially offset by higher net
sales of about $130 million for
strategic and missile defense programs due to higher development
volume (Next Generation Interceptor (NGI)).
Space's operating profit during the quarter ended June 26,
2022 decreased $67 million, or 20%, compared to the same
period in 2021. The decrease was primarily attributable to
approximately $55 million for
national security space programs primarily due to lower net
favorable profit adjustments (primarily Space-Based Infrared System
(SBIRS) and classified programs); and about $40 million of lower equity earnings from the
company's investment in United Launch Alliance (ULA). These
decreases were partially offset by an increase of approximately
$30 million for strategic and missile
defense programs due to higher net favorable profit adjustments
(primarily Fleet Ballistic Missile (FBM) programs). Operating
profit for the AWE program was comparable as its operating profit
in the second 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 $30
million lower in the second quarter of 2022 compared to the
same period in 2021.
Total equity earnings (primarily ULA) represented approximately
$5 million, or 2% of Space's operating profit during the
quarter ended June 26, 2022, compared to approximately
$45 million, or 13% during the quarter ended June 27,
2021.
Income Taxes
The company's effective income tax rate was 6.4% for the quarter
ended June 26, 2022 and 16.4% for the quarter ended
June 27, 2021. The rate for the second quarter of 2022 is
lower primarily due to lower earnings before income taxes resulting
from a noncash, non-operating pension settlement charge of
$1.5 billion, which reduced the tax
expense by approximately $314
million. The rates for both periods benefited from the
research and development tax credit, tax deductions for foreign
derived intangible income and dividends paid to the company's
defined contribution plans with an employee stock ownership plan
feature.
Purchase of Group Annuity Contracts and Pension
Remeasurement
As previously announced, on June 24,
2022 the company purchased group annuity contracts to
transfer $4.3 billion of gross
defined benefit pension obligations and related plan assets to an
insurance company for approximately 13,600 U.S. retirees and
beneficiaries. The group annuity contracts were purchased using
assets from Lockheed Martin's master retirement trust and no
additional funding contribution was required. This transaction had
no impact on the amount, timing, or form of the monthly retirement
benefit payments to the affected retirees and beneficiaries. In
connection with this transaction, the company recognized a noncash,
non-operating settlement charge of $1.5
billion ($1.2 billion, or
$4.33 per share, after-tax) for the
affected plans in the quarter ended June 26,
2022, which represents the accelerated recognition of
actuarial losses that were included in the accumulated other
comprehensive loss account within stockholders' equity. As a result
of this transaction, the company was required to remeasure the
benefit obligations and plan assets for the affected defined
benefit pension plans in the quarter ended June 26, 2022. We now expect FAS pension expense
of approximately $1.1 billion in
2022, inclusive of the noncash, non-operating pension settlement
charge of $1.5 billion (pre-tax)
described above. Excluding the noncash, non-operating pension
settlement charge, our expected FAS pension income will be
approximately $410 million in 2022,
which is $50 million lower than our
prior 2022 FAS pension income estimate of $460 million.
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
Update
|
|
April
2022
|
|
|
Business segment
operating profit (non-GAAP)
|
|
~$7,175
|
|
~$7,175
|
|
|
FAS/CAS operating
adjustment1
|
|
~1,710
|
|
~1,705
|
|
|
Other, net
|
|
~(525)
|
|
~(500)
|
|
|
Consolidated
operating profit (GAAP)
|
|
~$8,360
|
|
~$8,380
|
|
|
|
|
|
|
|
|
1
|
Reflects the amount by
which expected total CAS pension cost of $1.8 billion, exceeds the
expected FAS pension service cost and excludes
expected non-service
FAS pension (expense) 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 that are capitalized). 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.
Adjusted earnings before income taxes; adjusted net earnings
and adjusted diluted EPS
Earnings before income taxes, net earnings and diluted earnings
per share (EPS) were significantly impacted by certain
non-operational charges in the second quarter of 2022. Management
believes the presentation of these measures adjusted for the
impacts of these non-operational items is useful to investor in
understanding the company's underlying business performance and
comparing performance from period to period. The tax effects
related to each adjustment that impacted earnings before income
taxes are based on a blended tax rate that combines the federal
statutory rate of 21% plus an estimated state tax rate.
Net FAS/CAS pension adjustment – adjusted; Total FAS pension
income - adjusted
Net FAS/CAS pension adjustment and Total FAS pension (expense)
income have been adjusted for the second quarter 2022 noncash,
non-operating pension settlement charge of $1.5 billion. Management believes that the
exclusion of the pension settlement charge 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, July 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 and financial results, including supply chain disruptions
and delays, labor challenges associated with employee absences,
quarantine restrictions, 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 and the
impacts of inflation, 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;
- the continued delay of the definitization and funding of
the Lots 15-17 F-35 production contract;
- 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 to our supply chain);
- 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 and
dividend payments;
- the company's ability to recover costs under U.S. Government
contracts, the mix of fixed-price and cost-reimbursable contracts,
risks related to losses on fixed-price development programs, and
the impacts of cost overruns and 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;
- 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
|
|
Six Months
Ended
|
|
|
|
June
26,
2022
|
|
June
27,
2021
|
|
June
26,
2022
|
|
June
27,
2021
|
|
Net
sales
|
|
$
15,446
|
|
$
17,029
|
|
$
30,410
|
|
$
33,287
|
|
Cost of
sales2,3
|
|
(13,490)
|
|
(14,878)
|
|
(26,545)
|
|
(28,950)
|
|
Gross profit
|
|
1,956
|
|
2,151
|
|
3,865
|
|
4,337
|
|
Other income,
net
|
|
7
|
|
41
|
|
31
|
|
37
|
|
Operating
profit
|
|
1,963
|
|
2,192
|
|
3,896
|
|
4,374
|
|
Interest
expense
|
|
(141)
|
|
(142)
|
|
(276)
|
|
(282)
|
|
Non-service FAS pension
(expense) income4
|
|
(1,331)
|
|
94
|
|
(1,191)
|
|
187
|
|
Other non-operating
(expense) income, net5,6
|
|
(161)
|
|
26
|
|
(38)
|
|
102
|
|
Earnings before income
taxes
|
|
330
|
|
2,170
|
|
2,391
|
|
4,381
|
|
Income tax
expense
|
|
(21)
|
|
(355)
|
|
(349)
|
|
(729)
|
|
Net
earnings
|
|
$
309
|
|
$
1,815
|
|
$
2,042
|
|
$
3,652
|
|
Effective tax
rate
|
|
6.4 %
|
|
16.4 %
|
|
14.6 %
|
|
16.6 %
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
1.16
|
|
$
6.54
|
|
$
7.65
|
|
$
13.13
|
|
Diluted
|
|
$
1.16
|
|
$
6.52
|
|
$
7.62
|
|
$
13.08
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
265.8
|
|
277.4
|
|
267.0
|
|
278.1
|
|
Diluted
|
|
266.7
|
|
278.4
|
|
267.9
|
|
279.1
|
|
|
|
|
|
|
|
|
|
|
|
Common shares reported
in stockholders' equity at end of period
|
|
|
|
|
|
264
|
|
276
|
|
|
|
|
|
|
|
|
|
|
1
|
The company 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 June 26 for the second quarter of 2022 and June 27 for
the second 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 company's
fiscal year ends on Dec. 31.
|
2
|
In the quarters ended
June 26, 2022 and June 27, 2021, the company recognized net losses
of $61 million ($46 million, or $0.17 per share,
after-tax) and net gains of $24 million ($18 million, or $0.06 per
share, after-tax) due to changes in the fair value of investments
held in a trust
for deferred compensation plans.
|
3
|
During the quarter
ended June 27, 2021, the company recorded a loss of $225 million
($169 million, or $0.61 per share, after-tax) at its
Aeronautics business segment as a result of performance issues on a
classified program.
|
4
|
During the quarter
ended June 26, 2022, the company recognized a $1.5 billion ($1.2
billion, or $4.33 per share, after-tax) noncash, non-operating
pension settlement charge related to the purchase of group annuity
contracts to transfer $4.3 billion of gross pension obligations
and
related plan assets to an insurance company, which represents the
accelerated recognition of actuarial losses that were included in
the
accumulated other comprehensive loss account within stockholders'
equity.
|
5
|
Other non-operating
(expense) income, net for the quarters ended June 26, 2022 and June
27, 2021 include net losses of $143 million
($107 million, or $0.40 per share, after-tax) and net gains of
$14 million ($11 million, or $0.04 per share, after-tax)
due to changes in the fair
value of investments held in the Lockheed Martin Ventures
Fund.
|
6
|
Other non-operating
(expense) income, net for the quarter ended June 26, 2022 include a
charge of $34 million ($26 million, or $0.10 per
share, after-tax) due to a debt refinancing transaction.
|
|
Lockheed Martin
Corporation
Business Segment
Summary Operating Results
(unaudited;
in millions)
|
|
|
|
Quarters
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
June 26,
2022
|
|
June 27,
2021
|
|
%
Change
|
|
June 26,
2022
|
|
June 27,
2021
|
|
%
Change
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
5,862
|
|
$
6,666
|
|
(12 %)
|
|
$ 12,263
|
|
$ 13,053
|
|
(6 %)
|
|
Missiles and Fire
Control
|
|
2,747
|
|
2,944
|
|
(7 %)
|
|
5,199
|
|
5,693
|
|
(9 %)
|
|
Rotary and Mission
Systems
|
|
4,012
|
|
4,242
|
|
(5 %)
|
|
7,564
|
|
8,349
|
|
(9 %)
|
|
Space
|
|
2,825
|
|
3,177
|
|
(11 %)
|
|
5,384
|
|
6,192
|
|
(13 %)
|
|
Total net
sales
|
|
$
15,446
|
|
$ 17,029
|
|
(9 %)
|
|
$ 30,410
|
|
$ 33,287
|
|
(9 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics1
|
|
$
612
|
|
$
572
|
|
7 %
|
|
$
1,291
|
|
$
1,265
|
|
2 %
|
|
Missiles and Fire
Control
|
|
418
|
|
401
|
|
4 %
|
|
802
|
|
797
|
|
1 %
|
|
Rotary and Mission
Systems
|
|
403
|
|
458
|
|
(12 %)
|
|
751
|
|
891
|
|
(16 %)
|
|
Space
|
|
268
|
|
335
|
|
(20 %)
|
|
513
|
|
562
|
|
(9 %)
|
|
Total business
segment operating
profit
|
|
1,701
|
|
1,766
|
|
(4 %)
|
|
3,357
|
|
3,515
|
|
(4 %)
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
425
|
|
489
|
|
|
|
851
|
|
978
|
|
|
|
Severance and
restructuring charges
|
|
—
|
|
—
|
|
|
|
—
|
|
(36)
|
|
|
|
Other,
net2
|
|
(163)
|
|
(63)
|
|
|
|
(312)
|
|
(83)
|
|
|
|
Total unallocated
items
|
|
262
|
|
426
|
|
(38 %)
|
|
539
|
|
859
|
|
(37 %)
|
|
Total consolidated
operating
profit
|
|
$
1,963
|
|
$
2,192
|
|
(10 %)
|
|
$
3,896
|
|
$
4,374
|
|
(11 %)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
10.4 %
|
|
8.6 %
|
|
|
|
10.5 %
|
|
9.7 %
|
|
|
|
Missiles and Fire
Control
|
|
15.2 %
|
|
13.6 %
|
|
|
|
15.4 %
|
|
14.0 %
|
|
|
|
Rotary and Mission
Systems
|
|
10.0 %
|
|
10.8 %
|
|
|
|
9.9 %
|
|
10.7 %
|
|
|
|
Space
|
|
9.5 %
|
|
10.5 %
|
|
|
|
9.5 %
|
|
9.1 %
|
|
|
|
Total business
segment operating
margin
|
|
11.0 %
|
|
10.4 %
|
|
|
|
11.0 %
|
|
10.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated
operating
margin
|
|
12.7 %
|
|
12.9 %
|
|
|
|
12.8 %
|
|
13.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
During the quarter
ended June 27, 2021, the company recorded a loss of $225 million
($169 million, or $0.61 per share, after-tax) at its
Aeronautics
business segment as a result of performance issues on a classified
program.
|
2
|
Net earnings for the
quarters ended June 26, 2022 and June 27, 2021 include net losses
of $61 million ($46 million, or $0.17 per share, after-tax)
and net gains of $24 million ($18 million, or $0.06 per share,
after-tax) due to changes in the fair value of investments held in
a trust for deferred
compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lockheed Martin
Corporation
Consolidated Balance
Sheets
(unaudited,
in millions, except par value)
|
|
|
|
|
|
June
26,
2022
|
|
Dec.
31,
2021
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,775
|
|
$
3,604
|
|
Receivables,
net
|
|
3,401
|
|
1,963
|
|
Contract
assets
|
|
11,753
|
|
10,579
|
|
Inventories
|
|
3,431
|
|
2,981
|
|
Other current
assets
|
|
613
|
|
688
|
|
Total current
assets
|
|
20,973
|
|
19,815
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
7,569
|
|
7,597
|
|
Goodwill
|
|
10,794
|
|
10,813
|
|
Intangible assets,
net
|
|
2,584
|
|
2,706
|
|
Deferred income
taxes
|
|
2,680
|
|
2,290
|
|
Other noncurrent
assets
|
|
7,158
|
|
7,652
|
|
Total
assets
|
|
$
51,758
|
|
$
50,873
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
2,309
|
|
$
780
|
|
Salaries, benefits and
payroll taxes
|
|
2,935
|
|
3,108
|
|
Contract
liabilities
|
|
8,077
|
|
8,107
|
|
Other current
liabilities
|
|
3,158
|
|
2,002
|
|
Total current
liabilities
|
|
16,479
|
|
13,997
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
11,644
|
|
11,670
|
|
Accrued pension
liabilities
|
|
5,808
|
|
8,319
|
|
Other noncurrent
liabilities
|
|
6,395
|
|
5,928
|
|
Total
liabilities
|
|
40,326
|
|
39,914
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Common stock, $1 par
value per share
|
|
264
|
|
271
|
|
Additional paid-in
capital
|
|
—
|
|
94
|
|
Retained
earnings
|
|
19,336
|
|
21,600
|
|
Accumulated other
comprehensive loss
|
|
(8,168)
|
|
(11,006)
|
|
Total stockholders'
equity
|
|
11,432
|
|
10,959
|
|
Total liabilities and
equity
|
|
$
51,758
|
|
$
50,873
|
|
|
|
|
|
|
Lockheed Martin
Corporation
Consolidated
Statements of Cash Flows
(unaudited;
in millions)
|
|
|
|
Six Months
Ended
|
|
|
June 26,
2022
|
|
June 27,
2021
|
Operating
activities
|
|
|
|
|
Net earnings
|
|
$
2,042
|
|
$
3,652
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
|
Depreciation and
amortization
|
|
672
|
|
670
|
Stock-based
compensation
|
|
134
|
|
127
|
Deferred income
taxes
|
|
(1,172)
|
|
24
|
Pension settlement
charge
|
|
1,470
|
|
—
|
Severance and
restructuring charges
|
|
—
|
|
36
|
Changes in assets and
liabilities
|
|
|
|
|
Receivables,
net
|
|
(1,438)
|
|
(633)
|
Contract
assets
|
|
(1,174)
|
|
(1,880)
|
Inventories
|
|
(450)
|
|
426
|
Accounts
payable
|
|
1,522
|
|
743
|
Contract
liabilities
|
|
(30)
|
|
(166)
|
Income
taxes
|
|
1,065
|
|
33
|
Qualified defined
benefit pension plans
|
|
(231)
|
|
(133)
|
Other, net
|
|
331
|
|
117
|
Net cash provided
by operating activities
|
|
2,741
|
|
3,016
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(572)
|
|
(599)
|
Other, net
|
|
(11)
|
|
210
|
Net cash used for
investing activities
|
|
(583)
|
|
(389)
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Issuance of long-term
debt, net of related costs
|
|
2,267
|
|
—
|
Repayments of long-term
debt
|
|
(2,250)
|
|
—
|
Repurchases of common
stock
|
|
(2,356)
|
|
(1,500)
|
Dividends
paid
|
|
(1,511)
|
|
(1,460)
|
Other, net
|
|
(137)
|
|
(82)
|
Net cash used for
financing activities
|
|
(3,987)
|
|
(3,042)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
(1,829)
|
|
(415)
|
Cash and cash
equivalents at beginning of period
|
|
3,604
|
|
3,160
|
Cash and cash
equivalents at end of period
|
|
$
1,775
|
|
$
2,745
|
|
|
|
|
|
|
Lockheed Martin
Corporation
Other Supplemental
Information
(unaudited;
in millions)
|
|
Our pretax FAS
(expense) income related to our qualified defined benefit pension
plans consisted of the following:
|
|
|
|
|
|
Quarters
Ended
|
|
Six Months
Ended
|
|
Qualified defined
benefit pension plans
|
|
June 26,
2022
|
|
June 27,
2021
|
|
June 26,
2022
|
|
June 27,
2021
|
|
Operating:
|
|
|
|
|
|
|
|
|
|
Service
cost
|
|
$
(24)
|
|
$
(27)
|
|
$
(48)
|
|
$
(54)
|
|
Non-operating:
|
|
|
|
|
|
|
|
|
|
Interest
cost
|
|
(303)
|
|
(310)
|
|
(605)
|
|
(621)
|
|
Expected return on
plan assets
|
|
503
|
|
569
|
|
1,005
|
|
1,138
|
|
Recognized net
actuarial losses
|
|
(151)
|
|
(252)
|
|
(301)
|
|
(504)
|
|
Amortization of prior
service credits
|
|
90
|
|
87
|
|
180
|
|
174
|
|
Pension settlement
charge
|
|
(1,470)
|
|
—
|
|
(1,470)
|
|
—
|
|
Non-service FAS
pension (expense)
income
|
|
(1,331)
|
|
94
|
|
(1,191)
|
|
187
|
|
Total FAS pension
(expense) income
|
|
(1,355)
|
|
67
|
|
(1,239)
|
|
133
|
|
Less: pension
settlement charge
|
|
1,470
|
|
—
|
|
1,470
|
|
—
|
|
Total FAS
pension income -
adjusted1
|
|
$
115
|
|
$
67
|
|
$
231
|
|
$
133
|
|
|
|
|
|
|
|
|
|
|
1
|
Total FAS pension
(expense) income – adjusted is a non-GAAP measure. See the "Use of
Non-GAAP Financial Measures" section of this news
release for more information.
|
Our total net FAS/CAS pension adjustment for the quarters and
six months ended June 26, 2022 and
June 27, 2021, including the service
and non-service cost components of FAS pension (expense) income for
our qualified defined benefit pension plans, were as follows:
|
|
|
Quarters
Ended
|
|
Six Months
Ended
|
|
|
|
June 26,
2022
|
|
June 27,
2021
|
|
June 26,
2022
|
|
June 27,
2021
|
|
Total FAS (expense)
income and CAS costs
|
|
|
|
|
|
|
|
|
|
FAS pension (expense)
income
|
|
$
(1,355)
|
|
$
67
|
|
$
(1,239)
|
|
$
133
|
|
Less: CAS pension
cost
|
|
449
|
|
516
|
|
899
|
|
1,032
|
|
Net FAS/CAS pension
adjustment
|
|
(906)
|
|
583
|
|
(340)
|
|
1,165
|
|
Less: pension
settlement charge
|
|
1,470
|
|
—
|
|
1,470
|
|
—
|
|
Net FAS/CAS pension
adjustment - adjusted1
|
|
$
564
|
|
$
583
|
|
$
1,130
|
|
$
1,165
|
|
|
|
|
|
|
|
|
|
|
|
Service and
non-service cost reconciliation
|
|
|
|
|
|
|
|
|
|
FAS pension service
cost
|
|
$
(24)
|
|
$
(27)
|
|
$
(48)
|
|
$
(54)
|
|
Less: CAS pension
cost
|
|
449
|
|
516
|
|
899
|
|
1,032
|
|
FAS/CAS operating
adjustment
|
|
425
|
|
489
|
|
851
|
|
978
|
|
Non-service FAS pension
income
|
|
(1,331)
|
|
94
|
|
(1,191)
|
|
187
|
|
Net FAS/CAS pension
adjustment
|
|
(906)
|
|
583
|
|
(340)
|
|
1,165
|
|
Less: pension
settlement charge
|
|
1,470
|
|
—
|
|
1,470
|
|
—
|
|
Net FAS/CAS pension
adjustment - adjusted1
|
|
$
564
|
|
$
583
|
|
$
1,130
|
|
$
1,165
|
|
|
|
|
|
|
|
|
|
|
1
|
Net 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.
|
|
Lockheed Martin
Corporation
Selected Financial
Data
(unaudited;
in millions)
|
|
|
|
|
|
2022
Outlook
|
|
2021
Actual
|
|
Total FAS expense
and CAS cost
|
|
|
|
|
|
Total FAS pension
expense
|
|
$
(1,060)
|
|
$
(1,398)
|
|
Less: CAS pension
cost
|
|
1,800
|
|
2,066
|
|
Total FAS/CAS pension
adjustment
|
|
740
|
|
668
|
|
Less: pension
settlement charge
|
|
1,470
|
|
1,665
|
|
Net FAS/CAS pension
adjustment - adjusted1,2
|
|
$
2,210
|
|
$
2,333
|
|
|
|
|
|
|
|
Service and
non-service cost reconciliation
|
|
|
|
|
|
FAS pension service
cost
|
|
$
(90)
|
|
$
(106)
|
|
Less: CAS pension
cost
|
|
1,800
|
|
2,066
|
|
FAS/CAS operating
adjustment
|
|
1,710
|
|
1,960
|
|
FAS pension non-service
expense
|
|
(970)
|
|
(1,292)
|
|
Total FAS/CAS pension
adjustment
|
|
740
|
|
668
|
|
Less: pension
settlement charge
|
|
1,470
|
|
1,665
|
|
Net FAS/CAS pension
adjustment - adjusted1,2
|
|
$
2,210
|
|
$
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 $1,470 million in the
second quarter of 2022, and $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
Other Financial and
Operating Information
(unaudited;
in millions, except for aircraft deliveries and
weeks)
|
|
|
|
|
|
Quarters
Ended
|
|
Six Months
Ended
|
|
|
|
June 26,
2022
|
|
June 27,
2021
|
|
June 26,
2022
|
|
June 27,
2021
|
|
Amortization of
purchased intangibles
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
1
|
|
$
1
|
|
$
1
|
|
$
1
|
|
Missiles and Fire
Control
|
|
—
|
|
—
|
|
1
|
|
1
|
|
Rotary and Mission
Systems
|
|
58
|
|
58
|
|
116
|
|
116
|
|
Space
|
|
3
|
|
22
|
|
6
|
|
44
|
|
Total amortization
of purchased
intangibles
|
|
$
62
|
|
$
81
|
|
$
124
|
|
$
162
|
|
Backlog
|
|
June
26,
2022
|
|
Dec.
31,
2021
|
|
Aeronautics
|
|
$
43,828
|
|
$
49,118
|
|
Missiles and Fire
Control
|
|
29,165
|
|
27,021
|
|
Rotary and Mission
Systems
|
|
35,101
|
|
33,700
|
|
Space
|
|
26,547
|
|
25,516
|
|
Total
backlog
|
|
$
134,641
|
|
$
135,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Six Months
Ended
|
|
Aircraft
Deliveries
|
|
June 26,
2022
|
|
June 27,
2021
|
|
June 26,
2022
|
|
June 27,
2021
|
|
F-35
|
|
35
|
|
37
|
|
61
|
|
54
|
|
C-130J
|
|
6
|
|
6
|
|
11
|
|
8
|
|
Government helicopter
programs
|
|
25
|
|
20
|
|
42
|
|
35
|
|
Commercial helicopter
programs
|
|
—
|
|
—
|
|
—
|
|
1
|
|
International military
helicopter programs
|
|
5
|
|
7
|
|
5
|
|
8
|
|
Number of Weeks in
Reporting Period1
|
|
2022
|
|
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.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/lockheed-martin-reports-second-quarter-2022-financial-results-301588769.html
SOURCE Lockheed Martin