01—Abstract
Summary
Summary of the 10-K filed February 6, 2018. Cited figures are marked; the original filing is the authoritative source.
Lockheed Martin Corporation's (LMT) 2017 10-K filing reveals a robust performance driven by its core defense business, with significant contributions from its Aeronautics and Missiles and Fire Control segments.
The company reported net sales of $51.0 billiona, a substantial increase driven by higher demand for aircraft and missile systems. The F-35 program remains a cornerstone, accounting for 25% of total consolidated net sales in 2017. Despite a significant non-cash tax charge related to the Tax Cuts and Jobs Act in the fourth quarter, which resulted in a net deficit in total equity, the company's operational performance remained strong.
Looking ahead, LMT anticipates a low-single digit increase in net sales for 2018, with projected growth in tactical missile programs and improved performance in the Rotary and Mission Systems segment. The company continues to focus on program execution, affordability initiatives, and investing in new technologies.
Key risks include dependence on U.S. government contracts, potential changes in government funding priorities, and competition. However, the company's diverse portfolio and strategic focus on critical national security priorities position it well for continued success.
02—Key points
Key Highlights
- Net sales for 2017 reached $51.0 billion, a notable increase attributed to higher demand across key business segments, particularly Aeronautics and Missiles and Fire Control.
- The F-35 program was the largest single program, contributing 25% of total consolidated net sales in 2017, underscoring its critical role in the company's revenue.
- The company recorded a significant one-time net tax charge of $1.9 billion ($6.69 per share) in Q4 2017 due to the Tax Cuts and Jobs Act, resulting in a total equity deficit.
- Backlog remained strong at $99.9 billion at the end of 2017, providing visibility into future revenue streams.
- The company is strategically growing its international sales, which accounted for 30% of total net sales in 2017.
- Operating profit showed resilience, increasing to $5.9 billion, reflecting disciplined cost management and program execution.
- LMT repurchased approximately $2.0 billion of its common stock in 2017 and increased its quarterly dividend, demonstrating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Lockheed Martin kept $0.04.
- Revenue$49.96B100.0%
- Cost of revenue−$43.59B87.2%
- Gross profit$6.37B12.8%
- Operating costs$373.0M0.7%
- Operating income$6.74B13.5%
- Interest, other & tax−$4.78B9.6%
- Net income$1.96B3.9%
04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 6, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $49.96B$47.25B | +5.7% |
| Cost of Revenue | $43.59B$41.89B | +4.1% |
| Gross Profit | $6.37B$5.40B | +18.0% |
| R&D Expenses | $1.20B$988.00M | +21.5% |
| Operating Income | $6.74B$5.89B | +14.5% |
| Interest Expense | $651.00M$663.00M | −1.8% |
| Net Income | $1.96B$5.17B | −62.1% |
| EPS (Basic) | $6.82$17.28 | −60.5% |
| EPS (Diluted) | $6.75$17.07 | −60.5% |
| Shares Outstanding (Basic) | 287.80M299.30M | −3.8% |
| Shares Outstanding (Diluted) | 290.60M303.10M | −4.1% |
05—Questions
Frequently Asked Questions
What were Lockheed Martin's total net sales in 2017, and which segments contributed most significantly?
Lockheed Martin reported total net sales of $51.0 billion in 2017. The Aeronautics segment was the largest contributor, generating $20.1 billion in net sales, followed by Rotary and Mission Systems ($14.2 billion), Space ($9.5 billion), and Missiles and Fire Control ($7.2 billion).
What was the impact of the Tax Cuts and Jobs Act on Lockheed Martin's financial results?
In the fourth quarter of 2017, Lockheed Martin recorded a one-time, non-cash tax charge of $1.9 billion ($6.69 per share) primarily related to the estimated impact of the Tax Cuts and Jobs Act, which lowered the U.S. corporate income tax rate. This charge, along with pension re-measurement adjustments, resulted in a deficit in total equity as of December 31, 2017.
What is the outlook for Lockheed Martin's net sales and operating profit in 2018?
The company expects 2018 net sales to increase in the low-single digit range, driven by increased production and sustainment volume on the F-35 program and tactical missile programs. Segment operating profit is projected to increase in the mid-single digit range, primarily due to performance improvements in the Rotary and Mission Systems segment.
How significant is the F-35 program to Lockheed Martin's revenue?
The F-35 program was the company's largest program, accounting for 25% of its total consolidated net sales in 2017. This highlights the program's crucial role in the company's financial performance.
06—Continue