Summary
Lockheed Martin Corporation (LMT) reported net sales of $47.2 billion for the fiscal year ending December 30, 2016. The company's business segments include Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space Systems. A significant strategic development during the year was the divestiture of the Information Systems & Global Solutions (IS&GS) business, which resulted in a one-time special cash payment of $1.8 billion to Lockheed Martin and a reduction in outstanding common stock. The acquisition of Sikorsky Aircraft Corporation in late 2015 continued to be integrated into the Rotary and Mission Systems segment, contributing significantly to revenue growth. The company maintained a strong focus on program execution, affordability initiatives, and investing in technology and personnel, while also returning cash to shareholders through dividends and share repurchases. Despite operational complexities and market pressures, Lockheed Martin demonstrated resilience. The company's backlog stood at $96.2 billion at year-end, indicating a robust pipeline of future business. Dependence on U.S. Government contracts remains high, with 71% of net sales derived from government customers. Key programs like the F-35 Joint Strike Fighter represent a substantial portion of sales and are expected to drive future growth, though they also present ongoing reviews and potential cost pressures from the new Presidential administration. The company also experienced a favorable tax rate in 2016 due to various deductions and tax credits, and the adoption of a new accounting standard for share-based payments.
Financial Highlights
50 data points| Revenue | $47.25B |
| Cost of Revenue | $41.89B |
| Gross Profit | $5.40B |
| R&D Expenses | $988.00M |
| Operating Income | $5.89B |
| Interest Expense | $663.00M |
| Net Income | $5.17B |
| EPS (Basic) | $17.28 |
| EPS (Diluted) | $17.07 |
| Shares Outstanding (Basic) | 299.30M |
| Shares Outstanding (Diluted) | 303.10M |
Key Highlights
- 1Net sales reached $47.2 billion, driven by strong performance across key segments, particularly Aeronautics and the newly acquired Sikorsky business within Rotary and Mission Systems.
- 2The company completed the strategic divestiture of its Information Systems & Global Solutions (IS&GS) business, receiving a $1.8 billion cash payment and reducing its outstanding share count.
- 3Total backlog was substantial at $96.2 billion, providing visibility for future revenue generation.
- 4The F-35 Joint Strike Fighter program continues to be the largest program, contributing 23% of total net sales and showing strong international interest and production growth.
- 5The company's effective income tax rate for continuing operations decreased to 23.2% in 2016 from 27.3% in 2015, aided by tax deductions, credits, and the gain from the AWE consolidation.
- 6Lockheed Martin continued its commitment to shareholder returns, increasing its quarterly dividend and engaging in significant share repurchases.
- 7A material weakness in internal controls was identified within the recently acquired Sikorsky business, related to process and IT controls, with remediation efforts underway.