10-QPeriod: Q1 FY2017

LOCKHEED MARTIN CORP Quarterly Report for Q1 Ended Mar 26, 2017

Filed April 26, 2017For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) reported first-quarter 2017 results with total net sales of $11.1 billion, an increase of 6.6% year-over-year, driven primarily by product sales growth in Aeronautics, Space Systems, and Rotary and Mission Systems segments. Net earnings from continuing operations were $763 million, or $2.61 per diluted share, consistent with the prior year's first quarter ($806 million, or $2.61 per diluted share). The company generated strong cash flow from operations of $1.67 billion, which supported significant capital returns to shareholders through $544 million in dividends and $500 million in share repurchases. The company's outlook for 2017 anticipates mid-single digit percentage growth in net sales, though operating profit margin is expected to decline slightly due to specific program charges and contract mix. Management highlighted ongoing efforts to manage costs, particularly for the F-35 program, and navigate potential U.S. government funding uncertainties. The balance sheet remains robust with $2.2 billion in cash and cash equivalents and $14.3 billion in net debt.

Financial Highlights

43 data points
Beta

Revenue

$11.21B

12.5% Gross Margin

Net Income

$789.00M

7.0% Net Margin

EPS (Diluted)

$2.69

Total Assets

$48.84B

Cash & Equivalents

$2.22B

Free Cash Flow

$1.67B

Financial Statements
Beta
Revenue$11.21B
Cost of Revenue$9.81B
Gross Profit$1.41B
Operating Income$1.40B
Interest Expense$155.00M
Net Income$789.00M
EPS (Basic)$2.72
EPS (Diluted)$2.69
Shares Outstanding (Basic)290.00M
Shares Outstanding (Diluted)292.80M

Key Highlights

  • 1Total net sales increased by 6.6% to $11.1 billion, primarily driven by product sales growth across multiple segments.
  • 2Net earnings from continuing operations remained stable at $2.61 per diluted share, despite a slight decrease in net earnings to $763 million.
  • 3Operating profit was $1.15 billion, with segment operating profit totaling $1.05 billion.
  • 4The company returned $1.044 billion to shareholders through dividends ($544 million) and share repurchases ($500 million) in the quarter.
  • 5Cash flow from operating activities was strong at $1.67 billion, demonstrating robust cash generation.
  • 6Significant progress was noted on the F-35 program, with 215 aircraft delivered and ongoing efforts to reduce costs.
  • 7The company ended the quarter with $2.2 billion in cash and cash equivalents, providing ample liquidity.

Frequently Asked Questions

Lockheed Martin reported a 6.6% increase in total net sales for the first quarter of 2017, reaching $11.1 billion, up from $10.4 billion in the same period of 2016. This growth was primarily driven by an increase in product sales, particularly within the Aeronautics, Space Systems, and Rotary and Mission Systems segments.

Net earnings from continuing operations decreased slightly to $763 million in Q1 2017 from $806 million in Q1 2016. However, diluted earnings per share from continuing operations remained stable at $2.61 for both periods. Overall net earnings were $763 million ($2.61 per diluted share) in Q1 2017, compared to $898 million ($2.91 per diluted share) in Q1 2016, with the prior year's figure boosted by discontinued operations.

Lockheed Martin generated strong net cash provided by operating activities of $1.67 billion in the first quarter of 2017, consistent with the prior year. This cash flow supported significant capital returns to shareholders, including $544 million in dividends paid and $500 million in common stock repurchases during the quarter.

Aeronautics saw an 8% increase in net sales driven by the F-35 program. Missiles and Fire Control (MFC) had a modest sales increase, with stable operating profit. Rotary and Mission Systems (RMS) reported a 3% sales increase, but operating profit was impacted by a $120 million charge related to the EADGE-T program. Space Systems experienced an 11% sales increase, largely due to consolidating AWE, and a 18% increase in operating profit. The F-35 program continues to be a key focus, with ongoing cost reduction efforts and progress in deliveries.