Summary
Lockheed Martin Corporation reported its third-quarter and nine-month results for the period ending September 26, 2010. The company experienced a modest increase in net sales, driven by growth in its Electronic Systems and IS&GS segments, partially offset by a decline in Space Systems. However, operating profit saw a notable decrease, primarily due to a $178 million charge related to a Voluntary Executive Separation Program (VESP). Despite the impact of the VESP charge, the company's financial performance reflects underlying strengths in its core business segments. Investors should note the planned divestiture of two businesses within the IS&GS segment (PAE and EIG), which are being treated as discontinued operations. The company also highlighted its strong cash flow generation, continued share repurchases, and dividend payments as key aspects of its capital deployment strategy. Management remains confident in its ability to fund operations and capital expenditures through operating cash flows.
Financial Highlights
47 data points| Revenue | $11.34B |
| Cost of Revenue | $10.55B |
| Gross Profit | $789.00M |
| Operating Income | $877.00M |
| Interest Expense | $85.00M |
| Net Income | $560.00M |
| EPS (Basic) | $1.56 |
| EPS (Diluted) | $1.54 |
| Shares Outstanding (Basic) | 360.10M |
| Shares Outstanding (Diluted) | 363.90M |
Key Highlights
- 1Net sales increased by 6% to $11.4 billion for the third quarter and by 4% to $33.0 billion for the first nine months of 2010 compared to the prior year periods.
- 2Operating profit decreased by 17% to $889 million for the third quarter and by 6% to $2.97 billion for the nine months, largely impacted by a $178 million Voluntary Executive Separation Program (VESP) charge.
- 3Diluted earnings per share from continuing operations were $1.55 for the third quarter and $4.89 for the nine months, down from $2.04 and $5.53 respectively in the prior year.
- 4The company is planning to divest two businesses within its Information Systems & Global Solutions (IS&GS) segment: Pacific Architects and Engineers, Inc. (PAE) and Enterprise Integration Group (EIG). These businesses are classified as assets and liabilities held for sale and their results are presented under discontinued operations.
- 5Net cash provided by operating activities was $3.39 billion for the nine months ended September 26, 2010, a decrease from $3.78 billion in the prior year, partly due to $1.4 billion in discretionary pension contributions.
- 6Lockheed Martin continued its share repurchase program, spending $1.57 billion in the first nine months of 2010, and increased its quarterly dividend payout.
- 7The company reported a substantial environmental liability of $959 million as of September 26, 2010, with a corresponding asset of $825 million for estimated future recovery.