10-QPeriod: Q3 FY2012

LOCKHEED MARTIN CORP Quarterly Report for Q3 Ended Sep 30, 2012

Filed October 25, 2012For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) reported its third-quarter and nine-month results for the period ending September 30, 2012. The company demonstrated resilience with an increase in net earnings from continuing operations, rising to $727 million ($2.21 per diluted share) for the quarter and $2.18 billion ($6.62 per diluted share) for the nine months, compared to the prior year periods. This growth was driven by strong performance across its business segments, particularly in Electronic Systems and Space Systems, and a reduction in severance charges. Despite a slight decrease in total net sales to $11.9 billion for the quarter, primarily due to lower product sales in Aeronautics and Space Systems, the company maintained healthy operating margins. Management highlighted the ongoing challenges and uncertainties related to potential U.S. government sequestration, which could significantly impact future results. However, Lockheed Martin's robust backlog and diversified business model provided a stable foundation. The company also continued its commitment to shareholder returns, declaring a dividend increase and actively engaging in share repurchases.

Financial Highlights

44 data points
Beta

Revenue

$11.87B

8.6% Gross Margin

Net Income

$727.00M

6.1% Net Margin

EPS (Diluted)

$2.21

Total Assets

$39.32B

Cash & Equivalents

$4.65B

Free Cash Flow

$1.36B

Financial Statements
Beta
Revenue$11.87B
Cost of Revenue$10.85B
Gross Profit$1.02B
Operating Income$1.14B
Interest Expense$97.00M
Net Income$727.00M
EPS (Basic)$2.25
EPS (Diluted)$2.21
Shares Outstanding (Basic)323.50M
Shares Outstanding (Diluted)328.30M

Key Highlights

  • 1Net earnings from continuing operations increased to $727 million for the quarter and $2.18 billion for the nine months ended September 30, 2012.
  • 2Diluted earnings per share from continuing operations grew to $2.21 for the quarter and $6.62 for the nine months.
  • 3Total net sales for the quarter decreased slightly to $11.87 billion, while for the nine months they increased to $35.08 billion.
  • 4Operating profit for the quarter increased by 5% to $1.1 billion, and by 14% to $3.31 billion for the nine months.
  • 5The company repurchased 3.3 million shares of common stock for $294 million during the quarter, with $2.6 billion remaining authorization for future repurchases.
  • 6Lockheed Martin declared a 15% increase in its fourth-quarter dividend per share to $1.15.
  • 7The company highlighted significant uncertainties related to potential U.S. government sequestration and its potential impact on future revenues and operations.

Frequently Asked Questions

For the quarter ended September 30, 2012, Lockheed Martin's total net sales were $11.87 billion, a slight decrease from $12.12 billion in the prior year quarter. For the nine months ended September 30, 2012, total net sales increased to $35.08 billion from $34.29 billion in the same period last year.

Lockheed Martin reported an increase in profitability. Net earnings from continuing operations were $727 million ($2.21 per diluted share) for the third quarter of 2012, up from $665 million ($1.99 per diluted share) in the prior year. For the nine-month period, net earnings from continuing operations rose to $2.18 billion ($6.62 per diluted share) from $1.97 billion ($5.72 per diluted share) in the comparable period of 2011. Operating profit also saw increases, reaching $1.1 billion for the quarter and $3.31 billion for the nine months.

Lockheed Martin operates through four segments: Aeronautics, Electronic Systems, Information Systems & Global Solutions (IS&GS), and Space Systems. For the quarter, Aeronautics saw a net sales decrease, while Electronic Systems, IS&GS, and Space Systems had mixed results. Electronic Systems and Space Systems showed strong operating profit growth. For the nine months, Electronic Systems, Space Systems, and Aeronautics showed revenue growth, while IS&GS experienced a decline.

Management expressed concern regarding potential U.S. government sequestration, which could significantly impact defense spending and future results. Despite this uncertainty, the company provided a preliminary outlook for 2013, expecting a low single-digit decline in net sales assuming sequestration does not occur. Key risks include government funding availability, sequestration, changes in customer priorities, and program-specific challenges.