01—Abstract
Summary
Summary of the 10-K filed January 26, 2023. Cited figures are marked; the original filing is the authoritative source.
Lockheed Martin Corporation's (LMT) 2022 10-K filing highlights a robust year driven by strong demand across its aerospace and defense segments, despite some lingering impacts from supply chain disruptions and the ongoing global geopolitical landscape.
The company's strategy continues to focus on "21st Century Security," emphasizing advanced networking and cutting-edge technologies to meet evolving defense requirements. Significant growth drivers include existing programs of record, classified programs, and advancements in hypersonics. Financially, LMT demonstrated resilience, with net sales of $66.0 billiona.
The company's diverse portfolio across Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space segments contributed to a substantial backlog of $150 billionb, indicating strong future revenue visibility. While facing some cost pressures from inflation and supply chain challenges, LMT managed these effectively, with a commitment to operational efficiency and affordability. The company also actively returned capital to shareholders through dividends and share repurchases, underscoring its financial strength and commitment to shareholder value.
02—Key points
Key Highlights
- Net sales for 2022 were $66.0 billion, with 73% generated from U.S. Government contracts, indicating significant reliance on government spending.
- The company ended 2022 with a substantial backlog of $150 billion, providing strong visibility into future revenue streams.
- Lockheed Martin's '21st Century Security' strategy focuses on integrating advanced technologies across all domains, with key growth areas including current programs, classified programs, hypersonics, and new awards.
- The F-35 program remains a critical revenue driver, representing 27% of consolidated net sales in 2022, although it faced delivery pauses due to engine supplier issues.
- The company actively managed its capital structure, repurchasing $7.9 billion of common stock and issuing $4.0 billion in senior unsecured notes during 2022.
- Despite experiencing supply chain disruptions and inflation, the company managed its cost of sales effectively, with product costs decreasing slightly year-over-year.
- The company continues to invest in research and development, crucial for maintaining its competitive edge in advanced technology and future defense systems.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Lockheed Martin kept $0.09.
- Revenue$65.98B100.0%
- Cost of revenue−$57.70B87.4%
- Gross profit$8.29B12.6%
- Operating costs$61.0M0.1%
- Operating income$8.35B12.7%
- Interest, other & tax−$2.62B4.0%
- Net income$5.73B8.7%
04—Financials
Financial Highlights
Figures from 10-KFY2022filed January 26, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $65.98B$67.04B | −1.6% |
| Cost of Revenue | $57.70B$57.98B | −0.5% |
| Gross Profit | $8.29B$9.06B | −8.5% |
| R&D Expenses | $1.70B$1.50B | +13.3% |
| Operating Income | $8.35B$9.12B | −8.5% |
| Interest Expense | $623.00M$569.00M | +9.5% |
| Net Income | $5.73B$6.32B | −9.2% |
| EPS (Basic) | $21.74$22.85 | −4.9% |
| EPS (Diluted) | $21.66$22.76 | −4.8% |
| Shares Outstanding (Basic) | 263.70M276.40M | −4.6% |
| Shares Outstanding (Diluted) | 264.60M277.40M | −4.6% |
05—Questions
Frequently Asked Questions
What is Lockheed Martin's primary customer base, and how dependent is the company on government contracts?
Lockheed Martin's principal customers are agencies of the U.S. Government, with 73% of its total consolidated net sales in 2022 derived from the U.S. Government, including 64% from the Department of Defense. This highlights a significant dependence on government contracts and defense spending.
How did supply chain issues and inflation affect Lockheed Martin's performance in 2022?
The company experienced impacts from supply chain disruptions and delays, as well as labor challenges, primarily due to COVID-19. While inflation did not significantly impact financial results in 2022, the company is factoring heightened inflation into new contract pricing and seeking economic price adjustment clauses. These factors contributed to slower-than-anticipated recovery from disruptions, with some impacts expected to continue into 2023.
What is the status of the F-35 program, and what are the associated risks?
The F-35 program remains Lockheed Martin's largest program, contributing significantly to sales. However, in late 2022, deliveries were paused due to issues with Government Furnished Equipment (GFE) engines, impacting flight operations and deliveries. Risks include ongoing performance, software development, cost pressures, sustainment costs, and supply chain challenges, all of which are subject to oversight and budgeting processes by the U.S. Government and international partners.
How is Lockheed Martin managing its financial obligations, particularly its pension plans?
Lockheed Martin actively manages its pension obligations. In 2022, the company purchased group annuity contracts to transfer approximately $4.3 billion of its defined benefit pension obligations, recognizing a noncash settlement charge. This is part of a strategy to reduce pension volatility and manage liabilities. The company made no contributions to its qualified defined benefit pension plans in 2022.
06—Continue