10-QPeriod: Q1 FY2023

LOCKHEED MARTIN CORP Quarterly Report for Q1 Ended Mar 26, 2023

Filed April 18, 2023For Securities:LMT

Summary

Lockheed Martin Corporation (LMT) reported a modest increase in net sales for the first quarter of 2023, reaching $15.1 billion, a 1% rise compared to the prior year's quarter. This growth was primarily driven by stronger performance in the Space segment, boosted by classified programs and the Next Generation Interceptor, alongside increased service sales in Aeronautics. Despite the revenue uptick, net earnings saw a slight decrease to $1.7 billion from $1.73 billion in the same period last year. Diluted earnings per share were $6.61, up from $6.44 in Q1 2022, benefiting from a reduction in outstanding shares due to ongoing share repurchases. The company's operational results were influenced by segment-specific dynamics, with Aeronautics and Missiles and Fire Control experiencing slight sales declines, while Rotary and Mission Systems remained relatively flat. Management highlighted the ongoing geopolitical environment as a factor influencing demand, noting increased interest in certain products. The company also continued its commitment to returning capital to shareholders, with significant share repurchases and dividend payments. Looking ahead, LMT faces continued geopolitical complexities, potential impacts from inflation, and scrutiny over U.S. government defense spending, including the FY24 budget and the debt ceiling. The company remains focused on operational efficiency and delivering key programs like the F-35, while actively managing its financial resources and capital deployment strategy.

Financial Highlights

45 data points
Beta

Revenue

$15.13B

13.5% Gross Margin

Net Income

$1.69B

11.2% Net Margin

EPS (Diluted)

$6.61

Total Assets

$54.62B

Cash & Equivalents

$2.44B

Free Cash Flow

$1.56B

Financial Statements
Beta
Revenue$15.13B
Cost of Revenue$13.08B
Gross Profit$2.05B
Operating Income$2.04B
Interest Expense$202.00M
Net Income$1.69B
EPS (Basic)$6.63
EPS (Diluted)$6.61
Shares Outstanding (Basic)254.70M
Shares Outstanding (Diluted)255.70M

Key Highlights

  • 1Total net sales increased by 1.1% to $15.13 billion in Q1 2023 compared to $14.96 billion in Q1 2022.
  • 2Net earnings decreased slightly to $1.69 billion from $1.73 billion year-over-year, while diluted EPS increased to $6.61 from $6.44.
  • 3The Space segment showed strong growth with net sales up 16% to $2.96 billion, driven by classified programs and the Next Generation Interceptor.
  • 4Aeronautics, the largest segment, saw a 2% decrease in net sales to $6.27 billion, primarily due to lower volume on F-35 production contracts.
  • 5Operating profit decreased across Aeronautics (-0.6%), Missiles and Fire Control (-2.1%), and Rotary and Mission Systems (-13.8%), while Space operating profit increased by 12.9%.
  • 6The company repurchased $500 million of its common stock during the quarter and paid $784 million in dividends.
  • 7Free cash flow increased to $1.27 billion from $1.14 billion in the prior year's quarter.

Frequently Asked Questions

In the first quarter of 2023, Lockheed Martin reported total net sales of $15.13 billion, a slight increase of 1.1% compared to the prior year. Net earnings were $1.69 billion, a marginal decrease from $1.73 billion in Q1 2022. Diluted earnings per share improved to $6.61 from $6.44, aided by share repurchases.

The Space segment was a standout performer, with net sales increasing by 16% driven by classified programs and the Next Generation Interceptor. The Aeronautics segment, despite being the largest, experienced a 2% decline in net sales due to lower F-35 production volumes. Missiles and Fire Control saw a 3% decrease in sales, while Rotary and Mission Systems sales were down 1%. Operating profit declined in all segments except Space.

Lockheed Martin demonstrated a commitment to returning capital to shareholders. During the quarter, the company repurchased $500 million of its common stock and paid $784 million in dividends. Free cash flow improved to $1.27 billion, indicating strong operational cash generation after capital expenditures.

The company's performance is significantly influenced by the geopolitical environment, with increased interest in its products due to global security concerns. Inflationary pressures are also a factor, potentially increasing costs and impacting margins, especially on existing fixed-price contracts. Additionally, U.S. government defense spending, the upcoming FY24 budget, and the debt ceiling negotiations are critical external factors to monitor.