- Net sales of $16.9 billion, an
increase of 2% year-over-year
- Net earnings of $1.7 billion,
or $6.73 per share
- Cash from operations of $2.9
billion and free cash flow of $2.5
billion
- $2.5 billion of cash
returned to shareholders through dividends and share
repurchases
- Increased share repurchase authority by $6.0 billion to a total authorization of
$13.0 billion
- Increased quarterly dividend to $3.15 per share
- Reaffirms 2023 financial outlook
BETHESDA, Md., Oct. 17,
2023 /PRNewswire/ -- Lockheed Martin Corporation
(NYSE: LMT) today reported third quarter 2023 net sales of
$16.9 billion, compared to
$16.6 billion in the third quarter of
2022. Net earnings in the third quarter of 2023 were $1.7 billion, or $6.73 per share, compared to $1.8 billion, or $6.71 per share, in the third quarter of
2022. Cash from operations was $2.9
billion in the third quarter of 2023, compared to
$3.1 billion in the third quarter of
2022. Free cash flow was $2.5 billion
in the third quarter of 2023, compared to $2.7 billion in the third quarter of 2022.
"Our third quarter results were at or above our expectations
across the board, generating $2.5
billion of free cash flow, with nearly 100% returned to
shareholders through dividends and share repurchases." said
Lockheed Martin Chairman, President and CEO Jim Taiclet. "Our backlog remains robust at
$156 billion as both domestic and
international orders were strong. Moreover, our 21st Century
Security strategy is resulting in new business successes, including
the award of the transformational AIR6500 integrated air and
missile defense program by the Australian Defence Force, which will
serve as a blueprint for future joint all-domain operations
worldwide.
Looking ahead, we'll continue to pursue our strategy of building
capacity, efficiency and resilience into our production operations,
driving advanced digital technologies to enhance integrated
deterrence through collaboration with our customers and tech and
aerospace industry partners, and expanding our international
business and operations. This strategy is designed to drive growth
in our traditional platforms and systems, augmented with digital
service revenues over time, which in turn will support our dynamic
capital allocation process to reward shareholders."
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
|
|
|
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
|
|
|
Earnings
Before
Income
Taxes
|
Net
Earnings
|
Diluted
EPS
|
|
Earnings
Before
Income
Taxes
|
Net
Earnings
|
Diluted
EPS
|
|
|
As Reported
(GAAP)
|
|
$ 1,953
|
$ 1,684
|
$
6.73
|
|
$ 2,099
|
$ 1,778
|
$ 6.71
|
|
|
Mark-to-market
investment losses1
|
|
14
|
11
|
0.04
|
|
59
|
45
|
0.16
|
|
|
As Adjusted
(Non-GAAP)2
|
|
$ 1,967
|
$ 1,695
|
$
6.77
|
|
$ 2,158
|
$ 1,823
|
$ 6.87
|
|
|
|
|
|
|
|
|
1
|
Includes changes in
valuations of the company's net assets and liabilities for deferred
compensation plans and early-stage company 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
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
|
Net
sales
|
|
$
16,878
|
|
$
16,583
|
|
$
48,697
|
|
$
46,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business segment
operating profit1,2
|
|
$
1,810
|
|
$
1,918
|
|
$
5,347
|
|
$
5,399
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
414
|
|
430
|
|
1,245
|
|
1,281
|
|
|
Intangible asset
amortization expense2
|
|
(61)
|
|
(62)
|
|
(185)
|
|
(186)
|
|
|
Other,
net3
|
|
(121)
|
|
(127)
|
|
(193)
|
|
(439)
|
|
|
Total unallocated
items
|
|
232
|
|
241
|
|
867
|
|
656
|
|
|
Consolidated
operating profit
|
|
$
2,042
|
|
$
2,159
|
|
$
6,214
|
|
$
6,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings3,4
|
|
$
1,684
|
|
$
1,778
|
|
$
5,054
|
|
$
3,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share3,4
|
|
$
6.73
|
|
$
6.71
|
|
$
19.97
|
|
$
14.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash from
operations5
|
|
$
2,891
|
|
$
3,133
|
|
$
5,555
|
|
$
5,874
|
|
|
Capital
expenditures
|
|
(364)
|
|
(405)
|
|
(987)
|
|
(977)
|
|
|
Free cash
flow1,5
|
|
$
2,527
|
|
$
2,728
|
|
$
4,568
|
|
$
4,897
|
|
|
|
|
|
|
|
|
|
|
|
|
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 reclassified 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
quarter ended Sept. 24, 2023 included insignificant net losses due
to changes in the fair value of net assets and liabilities for
deferred compensation plans, compared to net losses of $33 million
($25 million, or $0.09 per share, after-tax) for the quarter ended
Sept. 25, 2022.
|
|
4
|
Net earnings for the
quarters ended Sept. 24, 2023 and Sept. 25, 2022 included net
losses of $13 million ($10 million, or $0.04 per share,
after-tax) and $26 million ($20 million, or $0.07 per share,
after-tax) due to changes in the fair value of early-stage company
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)
|
|
|
Current 2023
Outlook1
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
~$66,250 -
$66,750
|
|
|
|
|
|
|
|
|
Business segment
operating profit2
|
|
|
~$7,325 -
$7,375
|
|
|
|
|
|
|
|
|
Total FAS/CAS pension
adjustment3
|
|
|
~$2,100
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
|
|
~$27.00 -
$27.20
|
|
|
|
|
|
|
|
|
Cash from
operations
|
|
|
~$8,150
|
|
|
Capital
expenditures
|
|
|
~$(1,950)
|
|
|
Free cash
flow2
|
|
|
≥$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 early-stage company
investments. The company's financial outlook for 2023 assumes that
the U.S. Government continues to operate and the company's programs
remain funded. In addition, the outlook includes known impacts from
inflationary pressures and labor and supply chain challenges at the
time of this news release and experienced 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
|
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. 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 third quarter of 2023 was
$2.9 billion and capital expenditures
were $364 million, resulting in free cash flow of $2.5 billion. The decrease in operating and free
cash flows in the third quarter of 2023 compared to the same period
in 2022 was primarily due to changes in inventory and customer
advances due to timing.
The company's cash activities in the third quarter of 2023,
included the following:
- paying cash dividends of $747
million;
- paying $1,750 million to
repurchase 4.0 million shares; and
- making a scheduled repayment of $115
million of long-term debt.
As previously announced on October 6,
2023, the company's board authorized the repurchase of its
common stock up to an additional $6.0
billion, increasing the total authorization for potential
future common stock repurchases to $13.0
billion. The stock repurchase program does not have an
expiration date and may be amended or terminated by the board of
directors at any time. The amount of shares ultimately purchased
and the timing of purchases are at the discretion of management and
subject to compliance with applicable law and regulation.
On October 6, 2023, the company
authorized a fourth quarter dividend payment of $3.15 per share, representing an increase of
$0.15 per share over the prior
quarterly dividend payment.
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
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
6,717
|
|
$
7,089
|
|
$
19,861
|
|
$
19,352
|
|
|
Missiles and Fire
Control
|
|
2,939
|
|
2,831
|
|
8,082
|
|
8,030
|
|
|
Rotary and Mission
Systems
|
|
4,121
|
|
3,781
|
|
11,528
|
|
11,345
|
|
|
Space
|
|
3,101
|
|
2,882
|
|
9,226
|
|
8,266
|
|
|
Total net
sales
|
|
$
16,878
|
|
$
16,583
|
|
$
48,697
|
|
$
46,993
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
671
|
|
$
759
|
|
$
2,064
|
|
$
2,051
|
|
|
Missiles and Fire
Control
|
|
398
|
|
383
|
|
1,146
|
|
1,186
|
|
|
Rotary and Mission
Systems
|
|
482
|
|
472
|
|
1,286
|
|
1,339
|
|
|
Space
|
|
259
|
|
304
|
|
851
|
|
823
|
|
|
Total business
segment operating
profit1
|
|
1,810
|
|
1,918
|
|
5,347
|
|
5,399
|
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
414
|
|
430
|
|
1,245
|
|
1,281
|
|
|
Intangible asset
amortization
expense1
|
|
(61)
|
|
(62)
|
|
(185)
|
|
(186)
|
|
|
Other, net
|
|
(121)
|
|
(127)
|
|
(193)
|
|
(439)
|
|
|
Total unallocated
items
|
|
232
|
|
241
|
|
867
|
|
656
|
|
|
Total consolidated
operating profit
|
|
$
2,042
|
|
$
2,159
|
|
$
6,214
|
|
$
6,055
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
Effective Jan. 1, 2023,
the company reclassified 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 the company's 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 the company's 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 the company's 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 the company's business segments and its 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 period they are determined and
reflect the inception-to-date effect of such changes.
The company's consolidated net favorable profit booking rate
adjustments represented approximately 19% and 24% of total segment
operating profit in the quarters ended September 24, 2023 and
September 25, 2022.
Aeronautics
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
|
Net
sales
|
|
$ 6,717
|
|
$ 7,089
|
|
$ 19,861
|
|
$ 19,352
|
|
|
Operating
profit
|
|
671
|
|
759
|
|
2,064
|
|
2,051
|
|
|
Operating
margin
|
|
10.0 %
|
|
10.7 %
|
|
10.4 %
|
|
10.6 %
|
|
|
Aeronautics' net sales in the third quarter of 2023 decreased
$372 million, or 5%, compared to the same period in 2022. The
decrease was primarily attributable to lower net sales of
$525 million for the F-35 program due
to lower volume on production contracts and the recognition in the
third quarter 2022 of $325 million of
sales deferred from the second quarter of 2022 until additional
contractual authorization and funding was received on the Lot 15
contract. This decrease was partially offset by higher net sales of
$125 million on classified programs
due to higher volume.
Aeronautics' operating profit in the third quarter of 2023
decreased $88 million, or 12%, compared to the same period in
2022. The decrease was primarily attributable to lower operating
profit of $115 million for the F-35
program due to lower volume and lower favorable profit adjustments
on production contracts and the recognition of sales and associated
operating profit in the third quarter of 2022 on the Lot 15
contract as described above. This decrease was partially offset by
higher operating profit of $50
million on classified programs due to higher net favorable
profit adjustments in 2023 and the absence in 2023 of unfavorable
profit adjustments recorded in the third quarter of 2022. Total net
profit booking rate adjustments were $80
million lower in the third quarter of 2023 compared to the
same period in 2022.
Missiles and Fire Control
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
|
Net
sales
|
|
$
2,939
|
|
$
2,831
|
|
$
8,082
|
|
$
8,030
|
|
|
Operating
profit
|
|
398
|
|
383
|
|
1,146
|
|
1,186
|
|
|
Operating
margin
|
|
13.5 %
|
|
13.5 %
|
|
14.2 %
|
|
14.8 %
|
|
|
MFC's net sales in the third quarter of 2023 increased
$108 million, or 4%, compared to the same period in 2022. The
increase was primarily attributable to higher net sales of
$125 million for tactical and strike
missile programs due to higher volume (Guided Multiple Launch
Rocket Systems (GMLRS) and High Mobility Artillery Rocket System
(HIMARS)). These increases were partially offset by lower net sales
of $60 million for integrated air and
missile defense programs due to lower volume (Patriot Advanced
Capability-3 (PAC-3)).
MFC's operating profit in the third quarter of 2023 increased
$15 million, or 4%, compared to the same period in 2022. The
increase was primarily attributable to higher operating profit of
$10 million for sensors and global
sustainment programs due to higher net favorable profit adjustments
(Apache). Operating profit for integrated air and missile defense
programs was comparable to the same period in 2022 due to lower
favorable profit adjustments (PAC-3) in 2023 offset by the absence
in 2023 of a $40 million unfavorable
profit adjustment on the Advanced Radar Threat System Variant 2
(ARTS-V2) program in the third quarter of 2022. Total net profit
booking rate adjustments were $15
million higher in the third quarter of 2023 compared to the
same period in 2022.
Rotary and Mission Systems
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
|
Net
sales
|
|
$ 4,121
|
|
$ 3,781
|
|
$
11,528
|
|
$ 11,345
|
|
|
Operating
profit
|
|
482
|
|
472
|
|
1,286
|
|
1,339
|
|
|
Operating
margin
|
|
11.7 %
|
|
12.5 %
|
|
11.2 %
|
|
11.8 %
|
|
|
RMS' net sales in the third quarter of 2023 increased
$340 million, or 9%, compared to the
same period in 2022. The increase was primarily attributable to
higher net sales of $235 million for
integrated warfare systems and sensors (IWSS) programs due to new
program ramp up (Defense of Guam,
Indirect Fire Protection Capability High Energy Laser (IFPC-HEL)
and TPY-4 programs) and higher volume (Aegis); and higher net sales
of $60 million on C6ISR (command,
control, communications, computers, cyber, combat systems,
intelligence, surveillance, and reconnaissance) programs due to
higher volume.
RMS' operating profit in the third quarter of 2023 increased
$10 million, or 2%, compared to the
same period in 2022. The increase was primarily attributable to
higher operating profit of $50
million for IWSS programs due to higher favorable profit
adjustments (Littoral Combat Ship (LCS)) and new program ramp up
(Defense of Guam, IFPC-HEL and
TPY-4 programs). This increase was partially offset by lower
operating profit of $35 million for
Sikorsky helicopter programs due to lower favorable profit
adjustments (Combat Rescue Helicopter (CRH) and Black Hawk). Total
net profit booking rate adjustments were $25
million lower in the third quarter of 2023 compared to the
same period in 2022.
Space
|
(in millions)
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
|
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
Sept.
24,
2023
|
|
Sept.
25,
2022
|
|
|
Net
sales
|
|
$ 3,101
|
|
$ 2,882
|
|
$
9,226
|
|
$
8,266
|
|
|
Operating
profit
|
|
259
|
|
304
|
|
851
|
|
823
|
|
|
Operating
margin
|
|
8.4 %
|
|
10.5 %
|
|
9.2 %
|
|
10.0 %
|
|
|
Space's net sales in the third quarter of 2023 increased
$219 million, or 8%, compared to the
same period in 2022. The increase was primarily attributable to
higher net sales of $135 million for
strategic and missile defense programs due to higher volume (Next
Generation Interceptor (NGI) development and Fleet Ballistic
Missile (FBM)); higher net sales of $45
million for national security space programs due to higher
volume (Global Positioning System (GPS) III); and higher net sales
of $40 million for commercial civil
space programs due to higher volume (Orion).
Space's operating profit in the third quarter of 2023 decreased
$45 million, or 15%, compared to the
same period in 2022. The decrease was primarily attributable to
$35 million of lower equity earnings
from ULA due to lower launch volume. Total net profit booking rate
adjustments were $30 million lower in
the third quarter of 2023 compared to the same period in 2022.
Total equity earnings (primarily ULA) represented approximately
$15 million, or 6% of Space's operating profit during the
quarter ended Sept. 24, 2023,
compared to approximately $50 million, or 16% during the
quarter ended Sept. 25, 2022.
Income Taxes
The company's effective income tax rate was 13.8% and 15.3% for
the quarters ended Sept. 24,
2023 and Sept. 25, 2022. The
rate for the third quarter of 2023 was lower than the third quarter
of 2022 primarily due to additional research and development tax
credits for prior years. The rates for all periods benefited from
research and development tax credits, tax deductions for foreign
derived intangible income and dividends paid to the company's
defined contribution plans with an employee stock ownership plan
feature.
Use of Non-GAAP Financial Measures
This news release contains the following non-generally accepted
accounting principles (non-GAAP) financial measures (as defined by
U.S. Securities and Exchange Commission (SEC) Regulation G). While
management believes that these non-GAAP financial measures may be
useful in evaluating the financial performance of the company, this
information should be considered supplemental to, and not a
substitute for, financial information prepared in accordance with
GAAP. In addition, the company's definitions for non-GAAP financial
measures may differ from similarly titled measures used by other
companies or analysts.
Business segment operating profit
Business segment operating profit represents operating profit
from the company's business segments before unallocated income and
expense. This measure is used by the company's senior management in
evaluating the performance of its business segments and is a
performance goal in the company's annual incentive plan. Business
segment operating margin is calculated by dividing business segment
operating profit by sales. The table below reconciles the non-GAAP
measure business segment operating profit with the most directly
comparable GAAP financial measure, consolidated operating
profit.
|
(in
millions)
|
|
|
2023
Outlook
|
|
|
Business segment
operating profit (non-GAAP)
|
|
|
~$7,325 -
$7,375
|
|
|
FAS/CAS operating
adjustment1
|
|
|
~1,660
|
|
|
Intangible asset
amortization expense
|
|
|
~(245)
|
|
|
Other, net
|
|
|
~(340)
|
|
|
Consolidated
operating profit (GAAP)
|
|
|
~$8,400 -
$8,450
|
|
|
|
|
|
|
|
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 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, October 17, 2023, at 11:00 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:
- 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;
- 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;
- 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 pandemics and 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 and intangibles;
- 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
|
|
Nine Months
Ended
|
|
|
|
Sept. 24,
2023
|
|
Sept. 25,
2022
|
|
Sept. 24,
2023
|
|
Sept. 25,
2022
|
|
Net
sales
|
|
$
16,878
|
|
$
16,583
|
|
$
48,697
|
|
$
46,993
|
|
Cost of
sales2
|
|
(14,830)
|
|
(14,463)
|
|
(42,513)
|
|
(41,008)
|
|
Gross profit
|
|
2,048
|
|
2,120
|
|
6,184
|
|
5,985
|
|
Other income,
net
|
|
(6)
|
|
39
|
|
30
|
|
70
|
|
Operating
profit
|
|
2,042
|
|
2,159
|
|
6,214
|
|
6,055
|
|
Interest
expense
|
|
(237)
|
|
(145)
|
|
(662)
|
|
(421)
|
|
Non-service FAS pension
income (expense)
|
|
111
|
|
111
|
|
332
|
|
(1,080)
|
|
Other non-operating
income (expense), net3
|
|
37
|
|
(26)
|
|
69
|
|
(64)
|
|
Earnings before income
taxes
|
|
1,953
|
|
2,099
|
|
5,953
|
|
4,490
|
|
Income tax
expense
|
|
(269)
|
|
(321)
|
|
(899)
|
|
(670)
|
|
Net
earnings
|
|
$
1,684
|
|
$
1,778
|
|
$
5,054
|
|
$
3,820
|
|
Effective tax
rate
|
|
13.8 %
|
|
15.3 %
|
|
15.1 %
|
|
14.9 %
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
6.75
|
|
$
6.73
|
|
$
20.04
|
|
$
14.36
|
|
Diluted
|
|
$
6.73
|
|
$
6.71
|
|
$
19.97
|
|
$
14.31
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
249.3
|
|
264.1
|
|
252.2
|
|
266.0
|
|
Diluted
|
|
250.2
|
|
265.1
|
|
253.1
|
|
266.9
|
|
|
|
|
|
|
|
|
|
|
|
Common shares reported
in stockholders'
equity at end of
period
|
|
|
|
|
|
247
|
|
261
|
|
|
|
|
|
|
|
|
|
|
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 Sept. 24, for the third quarter of 2023 and Sept. 25, for the
third 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 third quarter of
2023, the company recognized insignificant net losses due to
changes in the fair value of net assets and liabilities for
deferred compensation plans, compared to net losses of $33 million
($25 million, or $0.09 per share, after-tax) in the third quarter
of 2022.
|
3
|
In the third quarter of
2023 and 2022, the company recognized net losses of
$13 million ($10 million, or $0.04 per share, after-tax)
and $26 million ($20 million, or $0.07 per share, after-tax) due to
changes in the fair value of early-stage company
investments.
|
|
|
Lockheed Martin
Corporation
|
Business Segment
Summary Operating Results
|
(unaudited;
in millions)
|
|
|
|
|
Quarters
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
Sept. 24,
2023
|
|
Sept. 25,
2022
|
|
%
Change
|
|
Sept. 24,
2023
|
|
Sept. 25,
2022
|
|
%
Change
|
|
Net
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
6,717
|
|
$
7,089
|
|
(5 %)
|
|
$ 19,861
|
|
$ 19,352
|
|
3 %
|
|
Missiles and Fire
Control
|
|
2,939
|
|
2,831
|
|
4 %
|
|
8,082
|
|
8,030
|
|
1 %
|
|
Rotary and Mission
Systems
|
|
4,121
|
|
3,781
|
|
9 %
|
|
11,528
|
|
11,345
|
|
2 %
|
|
Space
|
|
3,101
|
|
2,882
|
|
8 %
|
|
9,226
|
|
8,266
|
|
12 %
|
|
Total net
sales
|
|
$
16,878
|
|
$ 16,583
|
|
2 %
|
|
$ 48,697
|
|
$ 46,993
|
|
4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
$
671
|
|
$
759
|
|
(12 %)
|
|
$
2,064
|
|
$
2,051
|
|
1 %
|
|
Missiles and Fire
Control
|
|
398
|
|
383
|
|
4 %
|
|
1,146
|
|
1,186
|
|
(3 %)
|
|
Rotary and Mission
Systems
|
|
482
|
|
472
|
|
2 %
|
|
1,286
|
|
1,339
|
|
(4 %)
|
|
Space
|
|
259
|
|
304
|
|
(15 %)
|
|
851
|
|
823
|
|
3 %
|
|
Total
business segment operating
profit1
|
|
1,810
|
|
1,918
|
|
(6 %)
|
|
5,347
|
|
5,399
|
|
(1 %)
|
|
Unallocated
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FAS/CAS operating
adjustment
|
|
414
|
|
430
|
|
|
|
1,245
|
|
1,281
|
|
|
|
Intangible asset
amortization expense
|
|
(61)
|
|
(62)
|
|
|
|
(185)
|
|
(186)
|
|
|
|
Other,
net1,2
|
|
(121)
|
|
(127)
|
|
|
|
(193)
|
|
(439)
|
|
|
|
Total unallocated
items
|
|
232
|
|
241
|
|
(4 %)
|
|
867
|
|
656
|
|
32 %
|
|
Total
consolidated operating
profit
|
|
$
2,042
|
|
$
2,159
|
|
(5 %)
|
|
$
6,214
|
|
$
6,055
|
|
3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aeronautics
|
|
10.0 %
|
|
10.7 %
|
|
|
|
10.4 %
|
|
10.6 %
|
|
|
|
Missiles and Fire
Control
|
|
13.5 %
|
|
13.5 %
|
|
|
|
14.2 %
|
|
14.8 %
|
|
|
|
Rotary and Mission
Systems
|
|
11.7 %
|
|
12.5 %
|
|
|
|
11.2 %
|
|
11.8 %
|
|
|
|
Space
|
|
8.4 %
|
|
10.5 %
|
|
|
|
9.2 %
|
|
10.0 %
|
|
|
|
Total
business segment operating
margin
|
|
10.7 %
|
|
11.6 %
|
|
|
|
11.0 %
|
|
11.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
consolidated operating
margin
|
|
12.1 %
|
|
13.0 %
|
|
|
|
12.8 %
|
|
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 third quarter of
2023, the company recognized insignificant net losses due to
changes in the fair value of net assets and liabilities for
deferred compensation plans, compared to net losses of $33 million
($25 million, or $0.09 per share, after-tax) in the third quarter
of 2022.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
Total 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)
|
|
|
|
|
Sept. 24,
2023
|
|
Dec.
31,
2022
|
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
3,551
|
|
$
2,547
|
|
Receivables,
net
|
|
2,405
|
|
2,505
|
|
Contract
assets
|
|
13,605
|
|
12,318
|
|
Inventories
|
|
3,312
|
|
3,088
|
|
Other current
assets
|
|
449
|
|
533
|
|
Total current
assets
|
|
23,322
|
|
20,991
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
8,046
|
|
7,975
|
|
Goodwill
|
|
10,782
|
|
10,780
|
|
Intangible assets,
net
|
|
2,274
|
|
2,459
|
|
Deferred income
taxes
|
|
4,873
|
|
3,744
|
|
Other noncurrent
assets
|
|
7,369
|
|
6,931
|
|
Total
assets
|
|
$
56,666
|
|
$
52,880
|
|
|
|
|
|
|
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts
payable
|
|
$
3,817
|
|
$
2,117
|
|
Salaries, benefits and
payroll taxes
|
|
3,139
|
|
3,075
|
|
Contract
liabilities
|
|
7,936
|
|
8,488
|
|
Current maturities of
long-term debt
|
|
168
|
|
118
|
|
Other current
liabilities
|
|
2,133
|
|
2,089
|
|
Total current
liabilities
|
|
17,193
|
|
15,887
|
|
|
|
|
|
|
|
Long-term debt,
net
|
|
17,221
|
|
15,429
|
|
Accrued pension
liabilities
|
|
5,323
|
|
5,472
|
|
Other noncurrent
liabilities
|
|
7,655
|
|
6,826
|
|
Total
liabilities
|
|
47,392
|
|
43,614
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
|
|
|
|
Common stock, $1 par
value per share
|
|
247
|
|
254
|
|
Additional paid-in
capital
|
|
107
|
|
92
|
|
Retained
earnings
|
|
17,066
|
|
16,943
|
|
Accumulated other
comprehensive loss
|
|
(8,146)
|
|
(8,023)
|
|
Total
stockholders' equity
|
|
9,274
|
|
9,266
|
|
Total
liabilities and equity
|
|
$
56,666
|
|
$
52,880
|
|
|
|
|
|
|
Lockheed Martin
Corporation
|
Consolidated
Statements of Cash Flows
|
(unaudited;
in millions)
|
|
|
|
Nine Months
Ended
|
|
|
Sept. 24,
2023
|
|
Sept. 25,
2022
|
Operating
activities
|
|
|
|
|
Net earnings
|
|
$
5,054
|
|
$
3,820
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
|
Depreciation and
amortization
|
|
1,009
|
|
965
|
Stock-based
compensation
|
|
221
|
|
195
|
Deferred income
taxes
|
|
(395)
|
|
(540)
|
Pension settlement
charge
|
|
—
|
|
1,470
|
Changes in assets and
liabilities
|
|
|
|
|
Receivables,
net
|
|
100
|
|
(521)
|
Contract
assets
|
|
(1,287)
|
|
(1,754)
|
Inventories
|
|
(224)
|
|
(132)
|
Accounts
payable
|
|
1,731
|
|
1,834
|
Contract
liabilities
|
|
(552)
|
|
(48)
|
Income
taxes
|
|
(81)
|
|
113
|
Qualified defined
benefit pension plans
|
|
(283)
|
|
(322)
|
Other, net
|
|
262
|
|
794
|
Net cash provided
by operating activities
|
|
5,555
|
|
5,874
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
Capital
expenditures
|
|
(987)
|
|
(977)
|
Other, net
|
|
(4)
|
|
(4)
|
Net cash used for
investing activities
|
|
(991)
|
|
(981)
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
Issuance of long-term
debt, net of related costs
|
|
1,975
|
|
2,267
|
Repayments of long-term
debt
|
|
(115)
|
|
(2,250)
|
Repurchases of common
stock
|
|
(3,000)
|
|
(3,694)
|
Dividends
paid
|
|
(2,289)
|
|
(2,250)
|
Other, net
|
|
(131)
|
|
(140)
|
Net cash used for
financing activities
|
|
(3,560)
|
|
(6,067)
|
|
|
|
|
|
Net change in cash
and cash equivalents
|
|
1,004
|
|
(1,174)
|
Cash and cash
equivalents at beginning of period
|
|
2,547
|
|
3,604
|
Cash and cash
equivalents at end of period
|
|
$
3,551
|
|
$
2,430
|
|
|
|
|
|
Lockheed Martin
Corporation
|
Other Financial and
Operating Information
|
(unaudited;
in millions, except for aircraft deliveries and
weeks)
|
|
|
Backlog
|
|
Sept.
24,
2023
|
|
Dec.
31,
2022
|
|
Aeronautics
|
|
$
55,265
|
|
$
56,630
|
|
Missiles and Fire
Control
|
|
33,059
|
|
28,735
|
|
Rotary and Mission
Systems
|
|
37,593
|
|
34,949
|
|
Space
|
|
30,117
|
|
29,684
|
|
Total
backlog
|
|
$
156,034
|
|
$
149,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters
Ended
|
|
Nine Months
Ended
|
|
Aircraft
Deliveries
|
|
Sept. 24,
2023
|
|
Sept. 25,
2022
|
|
Sept. 24,
2023
|
|
Sept. 25,
2022
|
|
F-35
|
|
30
|
|
27
|
|
80
|
|
88
|
|
F-16
|
|
1
|
|
—
|
|
2
|
|
—
|
|
C-130J
|
|
7
|
|
7
|
|
13
|
|
18
|
|
Government helicopter
programs
|
|
3
|
|
20
|
|
24
|
|
62
|
|
Commercial helicopter
programs
|
|
3
|
|
—
|
|
4
|
|
—
|
|
International military
helicopter programs
|
|
1
|
|
—
|
|
1
|
|
5
|
|
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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SOURCE Lockheed Martin