10-KPeriod: FY2019

LOCKHEED MARTIN CORP Annual Report, Year Ended Dec 31, 2019

Filed February 7, 2020For Securities:LMT

Summary

Lockheed Martin Corporation's 2019 10-K filing reveals a strong financial performance, driven by significant growth in net sales across its key business segments. The company's largest program, the F-35 Lightning II Joint Strike Fighter, continued to be a major revenue generator, contributing substantially to the Aeronautics segment's performance. Overall, net sales increased significantly, reflecting robust demand for defense and aerospace products and services from both U.S. government and international customers. The company demonstrated effective cost management and operational efficiency, leading to improved operating profit. Lockheed Martin's strategic focus on innovation and program execution appears to be paying off, with a substantial backlog of $144 billion indicating continued revenue visibility for future periods. The company also continued its commitment to shareholder returns through dividends and share repurchases, signaling financial health and confidence in future prospects. However, investors should remain aware of the inherent risks associated with heavy reliance on U.S. government contracts, evolving procurement policies, and potential geopolitical factors that could impact long-term performance.

Financial Highlights

52 data points
Beta

Revenue

$59.81B

14.0% Gross Margin

Net Income

$6.23B

10.4% Net Margin

EPS (Diluted)

$21.95

Total Assets

$47.53B

Cash & Equivalents

$1.51B

Free Cash Flow

$7.31B

Financial Statements
Beta
Revenue$59.81B
Cost of Revenue$51.45B
Gross Profit$8.37B
R&D Expenses$1.30B
Operating Income$8.54B
Interest Expense$653.00M
Net Income$6.23B
EPS (Basic)$22.09
EPS (Diluted)$21.95
Shares Outstanding (Basic)282.00M
Shares Outstanding (Diluted)283.80M

Key Highlights

  • 1Net sales grew significantly in 2019, reaching $59.8 billion, driven by strong performance across all four business segments (Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space).
  • 2The F-35 program remains a critical revenue driver, accounting for 27% of total consolidated net sales in 2019.
  • 3Operating profit increased to $8.5 billion, reflecting effective program execution and cost management.
  • 4Backlog stood at a substantial $144 billion as of December 31, 2019, providing strong visibility for future revenue.
  • 5The company returned significant capital to shareholders through dividends ($2.6 billion) and share repurchases ($1.2 billion) in 2019.
  • 6A key risk factor highlighted is the company's heavy reliance on U.S. government contracts, particularly for the F-35 program, and the potential impact of budget changes or program cancellations.
  • 7Geopolitical factors, such as U.S. government sanctions on Turkey and its removal from the F-35 program, pose a risk to operations and supply chains.

Frequently Asked Questions

Lockheed Martin's primary revenue driver in 2019 was its Aeronautics segment, significantly boosted by the F-35 Lightning II Joint Strike Fighter program, which accounted for 27% of total consolidated net sales. Other key contributions came from its Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space segments, driven by various defense, aerospace, and technology programs.

In 2019, Lockheed Martin reported strong financial performance with increased net sales and operating profit. This was achieved through effective program execution, growth in key product lines like the F-35, and a focus on innovation and affordability. The company also actively managed its capital, returning value to shareholders via dividends and share repurchases.

A major risk identified is the company's substantial reliance on U.S. government contracts, particularly for major programs like the F-35. Fluctuations in government spending, changes in procurement policies, and geopolitical events (such as sanctions or international relations impacting programs) are significant concerns. Additionally, managing complex supply chains and developing new technologies present ongoing operational risks.

The company projected a mid-single digit increase in net sales for 2020, driven by growth across all four business segments, including the F-35 program, tactical missiles, Sikorsky helicopters, and hypersonics. The outlook was contingent on continued U.S. government support and funding for key programs.