10-QPeriod: Q3 FY2021

LOCKHEED MARTIN CORP Quarterly Report for Q3 Ended Sep 26, 2021

Filed October 26, 2021For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) reported its third-quarter 2021 financial results, showcasing a mixed performance impacted by several significant factors. While total net sales saw a slight decrease year-over-year for the quarter, reaching $16.03 billion, the nine-month period demonstrated growth, with net sales up to $49.32 billion. The company's earnings were significantly affected by a substantial non-cash pension settlement charge of $1.7 billion recognized in the third quarter. This charge, while impacting reported net earnings, is a non-cash item related to a pension risk transfer transaction. Operationally, the company faced supply chain challenges impacting sales in the Aeronautics, Missiles and Fire Control, and Space segments during the third quarter. Despite these headwinds, the Rotary and Mission Systems segment showed resilience. Looking ahead, Lockheed Martin has updated its full-year 2021 outlook, now expecting net sales of approximately $67 billion and maintaining its operating profit margin target. The company continues to focus on strategic investments, shareholder returns through dividends and share repurchases, and managing its long-term liabilities, including its pension obligations.

Financial Highlights

46 data points
Beta

Revenue

$16.03B

14.4% Gross Margin

Net Income

$614.00M

3.8% Net Margin

EPS (Diluted)

$2.21

Total Assets

$51.84B

Cash & Equivalents

$2.73B

Free Cash Flow

$1.94B

Financial Statements
Beta
Revenue$16.03B
Cost of Revenue$13.73B
Gross Profit$2.30B
Operating Income$2.29B
Interest Expense$141.00M
Net Income$614.00M
EPS (Basic)$2.22
EPS (Diluted)$2.21
Shares Outstanding (Basic)276.20M
Shares Outstanding (Diluted)277.30M

Key Highlights

  • 1Total net sales for the third quarter of 2021 were $16.03 billion, a decrease from $16.50 billion in the prior year's quarter.
  • 2For the first nine months of 2021, total net sales increased to $49.32 billion from $48.37 billion in the same period of 2020.
  • 3Net earnings for the third quarter of 2021 were $614 million, significantly down from $1.70 billion in the third quarter of 2020, largely due to a $1.7 billion non-cash pension settlement charge.
  • 4Diluted earnings per share for the quarter were $2.21, compared to $6.05 in the prior year's quarter, impacted by the pension settlement charge.
  • 5The company announced an updated 2021 net sales outlook of approximately $67 billion and maintained its total business segment operating profit margin expectation of around 11.0%.
  • 6Cash from operations for the first nine months of 2021 was $4.95 billion, a decrease from $6.38 billion in the same period of 2020, impacted by working capital changes and higher tax payments.
  • 7Lockheed Martin is proceeding with the acquisition of Aerojet Rocketdyne, with an anticipated closing in the first quarter of 2022, subject to regulatory approval.

Frequently Asked Questions

The substantial decrease in net earnings and diluted earnings per share for the third quarter of 2021 was primarily due to a non-cash pension settlement charge of $1.7 billion. This charge resulted from a pension risk transfer transaction where Lockheed Martin purchased group annuity contracts to transfer pension obligations and related assets to an insurance company.

Net sales were down year-over-year in the quarter for Aeronautics, Missiles and Fire Control, and Space, largely attributed to supply chain impacts and the renationalization of the AWE program affecting Space. Rotary and Mission Systems saw comparable net sales, with higher volume in helicopter programs offsetting decreases elsewhere. Operating profit saw increases in MFC and RMS, while Aeronautics and Space saw decreases in operating profit for the quarter.

Lockheed Martin raised its 2021 net sales outlook to approximately $67 billion and maintained its operating profit margin target. For 2022, the company anticipates a slight decline in net sales to around $66 billion, with operating margin expected to remain stable at approximately 11.0%. Cash from operations is projected to remain strong in both years.

Lockheed Martin continues to progress with its agreement to acquire Aerojet Rocketdyne Holdings, Inc. Both parties have certified substantial compliance with the FTC's 'second request' for information, and the parties are continuing to engage with the FTC. The company anticipates closing the transaction in the first quarter of 2022, subject to the satisfactory completion of the regulatory review process and other closing conditions.