- Net sales of $15.1
billion
- Net earnings of $1.7 billion,
or $6.61 per share, inclusive of
non-operational gains of $44 million,
or $0.18 per share
- Cash from operations of $1.6
billion and free cash flow of $1.3
billion
- Returned $1.3 billion of cash
to shareholders through dividends and share repurchases
- Reaffirms 2023 financial outlook
BETHESDA, Md., April 18,
2023 /PRNewswire/ -- Lockheed Martin Corporation
[NYSE: LMT] today reported first quarter 2023 net sales of
$15.1 billion, compared to
$15.0 billion in the first quarter of
2022. Net earnings in the first quarter of 2023 were $1.7 billion, or $6.61 per share, compared to $1.7 billion, or $6.44 per share, in the first quarter of
2022. Cash from operations was $1.6
billion in the first quarter of 2023, compared to
$1.4 billion in the first quarter of
2022. Free cash flow was $1.3 billion
in the first quarter of 2023, compared to $1.1 billion in the first quarter of 2022.
"We are off to a strong start for the new year in delivering to
our customers the products and systems essential to enhancing
national security and space exploration, and in delivering
performance and value to our shareholders," said Lockheed Martin
Chairman, President, and CEO Jim
Taiclet. "A few of the company's notable accomplishments
during the quarter included securing a contract for the first
United States sea-based hypersonic
missile program, Conventional Prompt Strike (CPS), delivering the
first F-16 fighter aircraft out of our new Greenville, South Carolina factory, and being
selected to provide 88 F-35 fifth-generation fighter aircraft to
Canada.
"We remain on track to achieve our full year 2023 financial
guidance and continue our robust approach to returning capital to
shareholders, with $500 million in
share repurchases and $784 million in
dividends distributed in the first quarter. In addition, all of our
Business Areas continue to develop mission-based solutions that are
designed to be integrated into an open architecture using 21st
century digital technologies to elevate the deterrence posture of
the United States and its allies.
We are demonstrating these capabilities in partnership with
commercial technology leaders across a number of disciplines. Many
of our signature platforms, including geosynchronous orbit
infrared-sensing satellites, the F-35, the Aegis radar system, and
our submarine combat systems, are being actively incorporated into
this architecture, enhancing their effectiveness and attractiveness
to our customers for many years to come. We intend to lead our
industry into the future, and we're doing it with a constant focus
on rewarding our shareholders over the long run in the
process."
Adjusted earnings before income taxes, net earnings and
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 items:
|
(in millions,
except per share data)
|
|
Quarters
Ended
|
|
|
|
|
March
26,
2023
|
|
March
27,
2022
|
|
|
|
|
Earnings
Before
Income
Taxes
|
Net
Earnings
|
Diluted
EPS
|
|
Earnings
Before
Income
Taxes
|
Net
Earnings
|
Diluted
EPS
|
|
|
As Reported
(GAAP)
|
|
$ 1,994
|
$ 1,689
|
$
6.61
|
|
$ 2,061
|
$ 1,733
|
$ 6.44
|
|
|
Mark-to-market
investments gains1
|
|
(58)
|
(44)
|
(0.18)
|
|
(2)
|
(1)
|
(0.01)
|
|
|
As Adjusted
(Non-GAAP)2
|
|
$ 1,936
|
$ 1,645
|
$
6.43
|
|
$ 2,059
|
$ 1,732
|
$ 6.43
|
|
|
|
|
|
|
|
|
1
|
Includes changes in
valuations of the company's net assets and liabilities for deferred
compensation plans and other investments.
|
|
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
Ended
|
|
|
|
|
March
26,
2023
|
|
March
27,
2022
|
|
|
Net
sales
|
|
$
15,126
|
|
$
14,964
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit1,2
|
|
$
1,682
|
|
$
1,718
|
|
|
Unallocated
items
|
|
|
|
|
|
|
FAS/CAS
operating adjustment
|
|
415
|
|
426
|
|
|
Intangible
asset amortization expense2
|
|
(62)
|
|
(62)
|
|
|
Other,
net3
|
|
2
|
|
(149)
|
|
|
Total unallocated
items
|
|
355
|
|
215
|
|
|
Consolidated
operating profit
|
|
$
2,037
|
|
$
1,933
|
|
|
|
|
|
|
|
|
|
Net
earnings3,4
|
|
$
1,689
|
|
$
1,733
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share3,4
|
|
$
6.61
|
|
$
6.44
|
|
|
|
|
|
|
|
|
|
Cash from
operations5
|
|
$
1,564
|
|
$
1,410
|
|
|
Capital
expenditures
|
|
(294)
|
|
(268)
|
|
|
Free cash
flow1,5
|
|
$
1,270
|
|
$
1,142
|
|
|
|
|
|
|
|
|
1
|
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.
|
|
2
|
Effective Jan. 1, 2023,
the company reclassed intangible asset amortization expense out of
the business segment operating profit and into the unallocated
items line item to better align with how management views and
manages the business. The 2022 amounts reflect the impact of this
change.
|
|
3
|
Other, net for the
quarters ended March 26, 2023 and March 27,
2022 include net gains of $29 million ($22 million, or $0.09
per share, after-tax) and net losses of $101 million ($76 million,
or $0.28 per share, after-tax) due to changes in the fair value of
net assets and liabilities for deferred compensation
plans.
|
|
4
|
Net earnings for the
quarters ended March 26, 2023 and March 27, 2022 include
net gains of $29 million ($22 million, or $0.09 per
share, after-tax) and net gains of $103 million ($77 million, or
$0.29 per share, after-tax) due to changes in the fair value of
other investments.
|
|
5
|
See the "Cash Flows and
Capital Deployment Activities" section of this news release for
more information.
|
|
|
|
|
2023 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)
|
|
2023
Outlook1
|
|
|
|
|
|
|
|
Net sales
|
|
~$65,000 -
$66,000
|
|
|
|
|
|
|
|
Business segment
operating profit2, 3
|
|
~$7,255 -
$7,355
|
|
|
|
|
|
|
|
Total FAS/CAS pension
adjustment4
|
|
~$2,100
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
~$26.60 -
$26.90
|
|
|
|
|
|
|
|
Cash from
operations4
|
|
≥$8,150
|
|
|
Capital
expenditures
|
|
~$(1,950)
|
|
|
Free cash
flow2,4
|
|
≥$6,200
|
|
|
|
|
|
|
1
|
The company's current
2023 financial outlook does not include any future gains or losses
related to changes in valuations of the company's net assets and
liabilities for deferred compensation plans or other investments.
The outlook assumes continued accelerated payments to suppliers on
an as needed basis, 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 to the company and broader defense
supply chain based on the company's understanding at the time of
this news release and its experience to date.
|
|
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
|
Effective Jan. 1, 2023,
the company no longer considers amortization expense related to
purchased intangible assets in its evaluation of business segment
operating performance. As a result, beginning on Jan 1. 2023,
intangible asset amortization expense, which was previously
included in business segment operating profit, will be reported in
unallocated corporate expense within operating income.
|
|
4
|
The 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 $1.7 billion and total expected
financial accounting standards (FAS) pension income of
approximately $375 million. The company does not expect to make
discretionary contributions to its qualified defined benefit
pension plans in 2023. 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 2023 was
$1.6 billion and capital expenditures
were $294 million, resulting in free cash flow of $1.3 billion. The increase in operating and free
cash flows in the first quarter of 2023 compared to the first
quarter of 2022 was primarily due to various changes in working
capital, primarily production and billing cycles impacting contract
assets and receivables (primarily F-35 program at Aeronautics and
missile programs at Missiles and Fire Control (MFC)), partially
offset by the timing of cash payments for accounts payable
(primarily Aeronautics).
The company's cash activities in the first quarter of 2023,
included the following:
- paying cash dividends of $784
million; and
- paying $500 million to repurchase
1.1 million shares (including 0.2 million shares received upon
settlement of an accelerated share repurchase agreement (ASR) in
April 2023).
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
26,
2023
|
|
March
27,
2022
|
|
|
Net
sales
|
|
|
|
|
|
|
Aeronautics
|
|
$
6,269
|
|
$
6,401
|
|
|
Missiles and Fire
Control
|
|
2,388
|
|
2,452
|
|
|
Rotary and Mission
Systems
|
|
3,510
|
|
3,552
|
|
|
Space
|
|
2,959
|
|
2,559
|
|
|
Total net
sales
|
|
$
15,126
|
|
$
14,964
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
Aeronautics
|
|
$
675
|
|
$
679
|
|
|
Missiles and Fire
Control
|
|
377
|
|
385
|
|
|
Rotary and Mission
Systems
|
|
350
|
|
406
|
|
|
Space
|
|
280
|
|
248
|
|
|
Total business
segment operating profit1
|
|
1,682
|
|
1,718
|
|
|
Unallocated
items
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
415
|
|
426
|
|
|
Intangible asset
amortization expense1
|
|
(62)
|
|
(62)
|
|
|
Other, net
|
|
2
|
|
(149)
|
|
|
Total unallocated
items
|
|
355
|
|
215
|
|
|
Total consolidated
operating profit
|
|
$
2,037
|
|
$
1,933
|
|
|
|
|
|
|
|
|
1
|
Effective Jan. 1, 2023,
the company reclassed intangible asset amortization expense out of
the business segment operating profit and into the unallocated
items line item to better align with how management views and
manages the business. The 2022 amounts reflect the impact of this
change.
|
|
|
|
|
|
|
|
|
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, intangible asset amortization expense, 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.
The company's consolidated net favorable profit booking rate
adjustments represented approximately 25% and 24% of total segment
operating profit in the quarters ended March 26, 2023 and
March 27, 2022.
Aeronautics
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
26,
2023
|
|
March
27,
2022
|
|
|
Net
sales
|
|
$
6,269
|
|
$
6,401
|
|
|
Operating
profit
|
|
675
|
|
679
|
|
|
Operating
margin
|
|
10.8 %
|
|
10.6 %
|
|
Aeronautics' net sales in the first quarter of 2023 decreased
$132 million, or 2%, compared to the
same period in 2022. The decrease was primarily attributable to
lower net sales of $335 million for
the F-35 program due to lower volume on production contracts. This
decrease was partially offset by higher sales of $135 million on classified programs due to higher
volume and $70 million for the F-16
program due to higher production and sustainment volume.
Aeronautics' operating profit in the first quarter of 2023 was
comparable to the same period in 2022. Operating profit for
the F-35 program was comparable as lower volume on production
contracts was mostly offset by contract mix. Operating profit for
the F-16 program was comparable as higher volume on production and
sustainment contracts was offset by higher unfavorable profit
adjustments on a production contract and sustainment contracts.
Total net profit booking rate adjustments were approximately
$15 million lower in the first
quarter of 2023 compared to the same period in 2022.
Missiles and Fire Control
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
26,
2023
|
|
March
27,
2022
|
|
|
Net
sales
|
|
$
2,388
|
|
$
2,452
|
|
|
Operating
profit
|
|
377
|
|
385
|
|
|
Operating
margin
|
|
15.8 %
|
|
15.7 %
|
|
MFC's net sales in the first quarter of 2023 decreased
$64 million, or 3%, compared to the
same period in 2022. The decrease was primarily attributable to
lower net sales of $85 million for
sensors and global sustainment programs as net sales for the first
quarter of 2022 reflect the impact of a favorable profit adjustment
on an international program as a result of a requirements
modification that did not recur in the first quarter of 2023; and
lower net sales of $60 million for
tactical and strike missile programs due to lower volume (Guided
Multiple Launch Rocket Systems (GMLRS)). These decreases were
partially offset by higher net sales of $70
million for integrated air and missile defense programs due
to the impact of higher net favorable profit adjustments (Patriot
Advanced Capability-3 (PAC-3)).
MFC's operating profit in the first quarter of 2023 decreased
$8 million, or 2%, compared to the
same period in 2022. The decrease was primarily attributable to
lower operating profit of $85 million
for sensors and global sustainment programs due to the favorable
profit adjustment on an international program in the first quarter
of 2022 as described above. This decrease was partially offset by
higher operating profit of $60
million for integrated air and missile defense programs due
to the impact of higher net favorable profit adjustments (PAC-3).
In addition, operating margin was positively impacted when compared
to the first quarter of 2022 due to contract mix at tactical and
strike missiles. Total net profit booking rate adjustments were
approximately $25 million lower in
the first quarter of 2023 compared to the same period in 2022.
Rotary and Mission Systems
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
26,
2023
|
|
March
27,
2022
|
|
|
Net
sales
|
|
$
3,510
|
|
$
3,552
|
|
|
Operating
profit
|
|
350
|
|
406
|
|
|
Operating
margin
|
|
10.0 %
|
|
11.4 %
|
|
RMS' net sales in the first quarter of 2023 decreased
$42 million, or 1%, compared to the
same period in 2022. The decrease was primarily attributable to
lower net sales of $75 million for
Sikorsky helicopter programs due to lower production volume (Black
Hawk); and lower net sales of $60
million for various C6ISR (command, control, communications,
computers, cyber, combat systems, intelligence, surveillance, and
reconnaissance) programs due to lower volume. These decreases were
partially offset by higher net sales of $85
million for integrated warfare systems and sensors (IWSS)
programs due to higher volume (Aegis and TPY-4 programs).
RMS' operating profit in the first quarter of 2023 decreased
$56 million, or 14%, compared to the
same period in 2022. The decrease was primarily attributable to
lower operating profit of $65 million
for Sikorsky helicopter programs due to lower production volume,
net favorable profit adjustments, and contract mix on the Black
Hawk program and unfavorable profit adjustments (CH-53K). Total net
profit booking rate adjustments were $35
million lower in the first quarter of 2023 compared to the
same period in 2022.
Space
|
(in millions)
|
|
Quarters
Ended
|
|
|
|
|
March
26,
2023
|
|
March
27,
2022
|
|
|
Net
sales
|
|
$
2,959
|
|
$
2,559
|
|
|
Operating
profit
|
|
280
|
|
248
|
|
|
Operating
margin
|
|
9.5 %
|
|
9.7 %
|
|
Space's net sales in the first quarter of 2023 increased
$400 million, or 16%, compared to the
same period in 2022. The increase was primarily attributable to
higher net sales of $185 million for
strategic and missile defense programs due to higher development
volume (Next Generation Interceptor (NGI)); higher net sales of
$170 million for national security
space programs due to higher development volume (classified
programs) and the impact of higher net favorable profit adjustments
(Next Generation Overhead Persistent Infrared geosynchronous
satellites (Next Gen OPIR) and classified programs); and higher net
sales of $55 million for commercial
civil space programs due to higher volume (Orion).
Space's operating profit in the first quarter of 2023 increased
$32 million, or 13%, compared to the
same period in 2022. The increase was primarily attributable to
higher operating profit of $70
million for national security space programs due to the
impact of higher net favorable profit adjustments (Next Gen OPIR
and classified programs). This increase was partially offset by
$45 million of lower equity earnings
from the company's investment in United Launch Alliance (ULA) due
to lower launch volume and an increase in new product development
costs. Total net profit booking rate adjustments were $85 million higher in the first quarter of 2023
compared to the same period in 2022.
Total equity (losses)/earnings (primarily ULA) represented
approximately $(15) million, or (5)%, of Space's
operating profit in the first quarter of 2023, compared to
approximately $30 million, or 12%, in
the first quarter of 2022.
Income Taxes
The company's effective income tax rate was 15.3% and 15.9% for
quarters ended March 26, 2023 and March 27, 2022. The
rates for both periods benefited from research and development tax
credits, tax deductions for foreign derived intangible income,
dividends paid to the company's defined contribution plans with an
employee stock ownership plan feature, and employee equity awards.
The rate for the first quarter of 2023 compared to the first
quarter of 2022 was lower primarily due to increased research and
development tax credits.
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)
|
|
|
2023
Outlook
|
|
|
Business segment
operating profit (non-GAAP)
|
|
|
~$7,255 -
$7,355
|
|
|
FAS/CAS operating
adjustment1
|
|
|
~1,660
|
|
|
Intangible asset
amortization expense
|
|
|
~(245)
|
|
|
Other, net
|
|
|
~(325)
|
|
|
Consolidated
operating profit (GAAP)
|
|
|
~$8,345 -
$8,445
|
|
|
|
|
|
|
|
1
|
Reflects the amount by
which expected total CAS pension cost of $1.7 billion, exceeds the
expected FAS pension service cost and excludes 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 that are capitalized). The company uses free cash flow to
evaluate its business performance and overall liquidity and it 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 repurchases and debt repayments) or available to
fund acquisitions or other investments. 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 and pension
contributions.
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 impacted by certain non-operational items for
all periods. Management believes the presentation of these measures
adjusted for the impacts of these non-operational items is useful
to investors 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.
Total FAS/CAS pension adjustment – adjusted; Total FAS
pension income - adjusted
Total FAS/CAS pension adjustment and Total FAS pension income
have been adjusted for the noncash, non-operating pension
settlement charge recorded in the second quarter 2022. 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.
Webcast and Conference Call Information
Lockheed Martin Corporation will webcast live the earnings
results conference call (listen-only mode) on Tuesday, April 18, 2023, at 11 a.m. ET on the Lockheed Martin Investor
Relations website at www.lockheedmartin.com/investor. The
accompanying presentation slides and relevant financial charts are
also available 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 116,000 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:
- budget uncertainty, the risk of future budget cuts, the impact
of continuing resolution funding mechanisms and 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, including government furnished
equipment;
- the timing of contract awards or delays in contract
definitization as well as the timing and customer acceptance of
product deliveries and performance milestones;
- the company's ability to recover costs under U.S. Government
contracts and the mix of fixed-price and cost-reimbursable
contracts;
- customer procurement policies that shift risk to contractors,
including competitively bid programs with fixed-price development
work or follow-on production options or other financial risks; and
the impact of investments, cost overruns or other cost pressures
and performance issues on fixed price contracts;
- changes in 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;
- performance and financial viability of key suppliers,
teammates, joint ventures (including United Launch Alliance),
joint venture partners, subcontractors and customers;
- economic, industry, business and political conditions including
their effects on governmental policy;
- the impact of inflation and other cost pressures;
- the impact of COVID-19 or future epidemics on the company's
business and financial results, including supply chain disruptions
and delays, employee absences, and program delays;
- 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 Chinese sanctions on the
company or its suppliers, teammates or partners, U.S. Government
sanctions on Türkish entities and persons, and potential indirect
effects of sanctions on Russia to
the company's supply chain);
- the company's success expanding into and doing business in
adjacent markets and internationally and the risks posed by
international sales;
- changes in foreign national priorities and foreign government
budgets and planned orders, including potential effects from
fluctuations in currency exchange rates;
- the competitive environment for the company's products and
services, including competition from startups and non-traditional
defense contractors;
- the company's ability to develop and commercialize new
technologies and products, including emerging digital and network
technologies and capabilities;
- the company's ability to benefit fully from or adequately
protect its intellectual property rights;
- 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 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 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, including through digital transformation and cost
reduction initiatives;
- 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;
- impacts of climate change and compliance with laws,
regulations, policies, 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 changes in the amount or reevaluation of uncertain
tax positions; 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, 2022 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 26,
2023
|
|
March 27,
2022
|
Net
sales
|
|
$
15,126
|
|
$
14,964
|
Cost of
sales2
|
|
(13,080)
|
|
(13,055)
|
Gross profit
|
|
2,046
|
|
1,909
|
Other (expense) income,
net
|
|
(9)
|
|
24
|
Operating
profit
|
|
2,037
|
|
1,933
|
Interest
expense
|
|
(202)
|
|
(135)
|
Non-service FAS pension
income
|
|
110
|
|
140
|
Other non-operating
income, net3
|
|
49
|
|
123
|
Earnings before income
taxes
|
|
1,994
|
|
2,061
|
Income tax
expense
|
|
(305)
|
|
(328)
|
Net
earnings
|
|
$
1,689
|
|
$
1,733
|
Effective tax
rate
|
|
15.3 %
|
|
15.9 %
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
Basic
|
|
$
6.63
|
|
$
6.46
|
Diluted
|
|
$
6.61
|
|
$
6.44
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
Basic
|
|
254.7
|
|
268.3
|
Diluted
|
|
255.7
|
|
269.2
|
|
|
|
|
|
Common shares reported
in stockholders'
equity at end of
period
|
|
254
|
|
265
|
|
|
|
|
|
|
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 March 26, for the first quarter of 2023 and March 27, for the
first quarter of 2022. 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 first quarter of
2023 and 2022. the company recognized net gains of $29 million ($22
million, or $0.09 per share, after-tax) and net losses of $101
million ($76 million, or $0.28 per share, after-tax) due to changes
in fair value of assets and liabilities for deferred compensation
plans.
|
3
|
In the first quarter of
2023 and 2022. the company recognized net gains of $29 million
($22 million, or $0.09 per share, after-tax) and net gains of
$103 million ($77 million, or $0.29 per share, after-tax) due to
changes in fair value of mark-to-market investments.
|
Lockheed Martin
Corporation
Business Segment
Summary Operating Results
(unaudited;
in millions)
|
|
|
|
Quarters
Ended
|
|
|
|
|
March 26,
2023
|
|
March 27,
2022
|
|
%
Change
|
Net
sales
|
|
|
|
|
|
|
Aeronautics
|
|
$
6,269
|
|
$
6,401
|
|
(2 %)
|
Missiles and Fire
Control
|
|
2,388
|
|
2,452
|
|
(3 %)
|
Rotary and Mission
Systems
|
|
3,510
|
|
3,552
|
|
(1 %)
|
Space
|
|
2,959
|
|
2,559
|
|
16 %
|
Total net
sales
|
|
$ 15,126
|
|
$ 14,964
|
|
1 %
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
Aeronautics
|
|
$
675
|
|
$
679
|
|
(1 %)
|
Missiles and Fire
Control
|
|
377
|
|
385
|
|
(2 %)
|
Rotary and Mission
Systems
|
|
350
|
|
406
|
|
(14 %)
|
Space
|
|
280
|
|
248
|
|
13 %
|
Total
business segment operating profit1
|
|
1,682
|
|
1,718
|
|
(2 %)
|
Unallocated
items
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
415
|
|
426
|
|
|
Intangible asset
amortization expense
|
|
(62)
|
|
(62)
|
|
|
Other,
net1,2
|
|
2
|
|
(149)
|
|
|
Total unallocated
items
|
|
355
|
|
215
|
|
65 %
|
Total
consolidated operating profit
|
|
$
2,037
|
|
$
1,933
|
|
5 %
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
Aeronautics
|
|
10.8 %
|
|
10.6 %
|
|
|
Missiles and Fire
Control
|
|
15.8 %
|
|
15.7 %
|
|
|
Rotary and Mission
Systems
|
|
10.0 %
|
|
11.4 %
|
|
|
Space
|
|
9.5 %
|
|
9.7 %
|
|
|
Total
business segment operating margin
|
|
11.1 %
|
|
11.5 %
|
|
|
|
|
|
|
|
|
|
Total
consolidated operating margin
|
|
13.5 %
|
|
12.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Effective Jan. 1, 2023,
the company reclassed intangible asset amortization expense out of
the business segment operating profit and into the unallocated
items line item to better align with how management views and
manages the business.
|
2
|
In the first quarter of
2023 and 2022, the company recognized net gains of $29 million ($22
million, or $0.09 per share, after-tax) and net losses of $101
million ($76 million, or $0.28 per share, after-tax) due to changes
in fair value of assets and liabilities for deferred compensation
plans.
|
Lockheed Martin
Corporation
Selected Financial
Data
(unaudited;
in millions)
|
|
|
|
Current
2023
Outlook
|
|
2022
Actual
|
Total FAS income
(expense) and CAS cost
|
|
|
|
|
FAS pension income
(expense)
|
|
$
375
|
|
$
(1,058)
|
Less: CAS pension
cost
|
|
1,725
|
|
1,796
|
Total FAS/CAS pension
adjustment
|
|
2,100
|
|
738
|
Less: pension
settlement charge
|
|
—
|
|
1,470
|
Total FAS/CAS pension
adjustment - adjusted1
|
|
$
2,100
|
|
$
2,208
|
|
|
|
|
|
Service and
non-service cost reconciliation
|
|
|
|
|
FAS pension service
cost
|
|
$
(65)
|
|
$
(87)
|
Less: CAS pension
cost
|
|
1,725
|
|
1,796
|
Total FAS/CAS pension
operating adjustment
|
|
1,660
|
|
1,709
|
Non-service FAS pension
income (expense)
|
|
440
|
|
(971)
|
Total FAS/CAS pension
adjustment
|
|
2,100
|
|
738
|
Less: pension
settlement charge
|
|
—
|
|
1,470
|
Net FAS/CAS pension
adjustment - adjusted1
|
|
$
2,100
|
|
$
2,208
|
|
|
|
|
|
|
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. The company recognized a noncash, non-operating
settlement charge of $1,470 million in the second quarter of 2022
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 26,
2023
|
|
Dec.
31,
2022
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
|
$
2,440
|
|
$
2,547
|
Receivables,
net
|
|
2,583
|
|
2,505
|
Contract
assets
|
|
13,189
|
|
12,318
|
Inventories
|
|
3,471
|
|
3,088
|
Other current
assets
|
|
461
|
|
533
|
Total current
assets
|
|
22,144
|
|
20,991
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
7,938
|
|
7,975
|
Goodwill
|
|
10,776
|
|
10,780
|
Intangible assets,
net
|
|
2,397
|
|
2,459
|
Deferred income
taxes
|
|
4,175
|
|
3,744
|
Other noncurrent
assets
|
|
7,192
|
|
6,931
|
Total
assets
|
|
$
54,622
|
|
$
52,880
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts
payable
|
|
$
3,271
|
|
$
2,117
|
Salaries, benefits and
payroll taxes
|
|
2,634
|
|
3,075
|
Contract
liabilities
|
|
8,336
|
|
8,488
|
Current maturities of
long-term debt
|
|
115
|
|
118
|
Other current
liabilities
|
|
2,626
|
|
2,089
|
Total current
liabilities
|
|
16,982
|
|
15,887
|
|
|
|
|
|
Long-term debt,
net
|
|
15,485
|
|
15,429
|
Accrued pension
liabilities
|
|
5,422
|
|
5,472
|
Other noncurrent
liabilities
|
|
7,087
|
|
6,826
|
Total
liabilities
|
|
44,976
|
|
43,614
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
Common stock, $1 par
value per share
|
|
254
|
|
254
|
Additional paid-in
capital
|
|
—
|
|
92
|
Retained
earnings
|
|
17,478
|
|
16,943
|
Accumulated other
comprehensive loss
|
|
(8,086)
|
|
(8,023)
|
Total
stockholders' equity
|
|
9,646
|
|
9,266
|
Total
liabilities and equity
|
|
$
54,622
|
|
$
52,880
|
Lockheed Martin
Corporation
Consolidated
Statements of Cash Flows
(unaudited;
in millions)
|
|
|
|
Quarters
Ended
|
|
|
March 26,
2023
|
|
March 27,
2022
|
Operating
activities
|
|
|
|
|
Net earnings
|
|
$
1,689
|
|
$
1,733
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
|
Depreciation and
amortization
|
|
325
|
|
329
|
Stock-based
compensation
|
|
57
|
|
54
|
Deferred income
taxes
|
|
(117)
|
|
(31)
|
Changes in assets and
liabilities
|
|
|
|
|
Receivables,
net
|
|
(78)
|
|
(564)
|
Contract
assets
|
|
(871)
|
|
(1,551)
|
Inventories
|
|
(383)
|
|
(163)
|
Accounts
payable
|
|
1,217
|
|
1,829
|
Contract
liabilities
|
|
(152)
|
|
(205)
|
Income
taxes
|
|
414
|
|
317
|
Qualified defined
benefit pension plans
|
|
(94)
|
|
(116)
|
Other, net
|
|
(443)
|
|
(222)
|
Net cash provided
by operating activities
|
|
1,564
|
|
1,410
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(294)
|
|
(268)
|
Other, net
|
|
35
|
|
17
|
Net cash used for
investing activities
|
|
(259)
|
|
(251)
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Repurchases of common
stock
|
|
(500)
|
|
(2,000)
|
Dividends
paid
|
|
(784)
|
|
(767)
|
Other, net
|
|
(128)
|
|
(113)
|
Net cash used for
financing activities
|
|
(1,412)
|
|
(2,880)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
(107)
|
|
(1,721)
|
Cash and cash
equivalents at beginning of period
|
|
2,547
|
|
3,604
|
Cash and cash
equivalents at end of period
|
|
$
2,440
|
|
$
1,883
|
Lockheed Martin
Corporation
Other Financial and
Operating Information
(unaudited;
in millions, except for aircraft deliveries and
weeks)
|
|
Backlog
|
|
March
26,
2023
|
|
Dec.
31,
2022
|
Aeronautics
|
|
$
53,302
|
|
$
56,630
|
Missiles and Fire
Control
|
|
27,453
|
|
28,735
|
Rotary and Mission
Systems
|
|
34,906
|
|
34,949
|
Space
|
|
29,435
|
|
29,684
|
Total
backlog
|
|
$
145,096
|
|
$
149,998
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
Aircraft
Deliveries
|
|
March 26,
2023
|
|
March 27,
2022
|
F-35
|
|
5
|
|
26
|
F-16
|
|
1
|
|
—
|
C-130J
|
|
2
|
|
5
|
Government helicopter
programs
|
|
10
|
|
17
|
Commercial helicopter
programs
|
|
1
|
|
—
|
|
|
Number of Weeks in
Reporting Period1
|
|
2023
|
|
2022
|
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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multimedia:https://www.prnewswire.com/news-releases/lockheed-martin-reports-first-quarter-2023-financial-results-301799590.html
SOURCE Lockheed Martin