01—Abstract
Summary
Summary of the 10-K filed February 7, 2020. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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.
02—Key points
Key Highlights
- Net 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).
- The F-35 program remains a critical revenue driver, accounting for 27% of total consolidated net sales in 2019.
- Operating profit increased to $8.5 billion, reflecting effective program execution and cost management.
- Backlog stood at a substantial $144 billion as of December 31, 2019, providing strong visibility for future revenue.
- The company returned significant capital to shareholders through dividends ($2.6 billion) and share repurchases ($1.2 billion) in 2019.
- A 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.
- Geopolitical 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Lockheed Martin kept $0.10.
- Revenue$59.81B100.0%
- Cost of revenue−$51.45B86.0%
- Gross profit$8.37B14.0%
- Operating costs$178.0M0.3%
- Operating income$8.54B14.3%
- Interest, other & tax−$2.31B3.9%
- Net income$6.23B10.4%
04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 7, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $59.81B$53.76B | +11.3% |
| Cost of Revenue | $51.45B$46.49B | +10.7% |
| Gross Profit | $8.37B$7.27B | +15.0% |
| R&D Expenses | $1.30B$1.30B | 0.0% |
| Operating Income | $8.54B$7.33B | +16.5% |
| Interest Expense | $653.00M$668.00M | −2.2% |
| Net Income | $6.23B$5.05B | +23.5% |
| EPS (Basic) | $22.09$17.74 | +24.5% |
| EPS (Diluted) | $21.95$17.59 | +24.8% |
| Shares Outstanding (Basic) | 282.00M284.50M | −0.9% |
| Shares Outstanding (Diluted) | 283.80M286.80M | −1.0% |
05—Questions
Frequently Asked Questions
What were Lockheed Martin's main revenue drivers in 2019?
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.
How did Lockheed Martin manage its financial performance in 2019?
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.
What are the significant risks highlighted in the filing for Lockheed Martin?
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.
What is the company's outlook for 2020 based on this filing?
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.
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