01—Abstract
Summary
Summary of the 10-Q filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Lockheed Martin Corporation (LMT) reported its first-quarter 2024 results, showing a solid increase in net sales driven by growth across all business segments, particularly in Missiles and Fire Control (MFC) and Rotary and Mission Systems (RMS).
While total net sales rose to $17.2 billiona from $15.1 billion year-over-year, net earnings saw a slight decrease to $1.5 billion from $1.7 billion, resulting in diluted earnings per share of $6.39 compared to $6.61 in the prior year's quarter. Despite the dip in net earnings, the company's operational performance remains strong, with a robust backlog of $159.4 billion providing visibility for future revenue.
Key financial activities in the quarter included significant debt issuance totaling $2.0 billionb, a $1.0 billion share repurchase program, and $3.15 per share in dividends paid. The company also highlighted continued demand for its products, especially in light of the evolving global geopolitical landscape, and noted ongoing efforts to mitigate supply chain challenges and inflationary pressures.
02—Key points
Key Highlights
- Total net sales increased by 13.7% to $17.2 billion in Q1 2024 from $15.1 billion in Q1 2023.
- Net earnings decreased by 8.6% to $1.5 billion ($6.39 per diluted share) in Q1 2024 from $1.7 billion ($6.61 per diluted share) in Q1 2023.
- The company issued $2.0 billion in senior unsecured notes in January 2024 to strengthen its financial position.
- Lockheed Martin repurchased $1.0 billion of its common stock during the quarter, demonstrating a commitment to returning capital to shareholders.
- The F-35 program continues to see strong international demand, with new orders and commitments from several countries.
- The company's backlog stood at $159.4 billion as of March 31, 2024, providing significant revenue visibility.
- Operating profit in the Missiles and Fire Control segment decreased by 17.5% due to a $100 million reach-forward loss recognized on a classified program.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Lockheed Martin kept $0.09.
- Revenue$17.20B100.0%
- Cost of revenue−$15.20B88.4%
- Gross profit$1.99B11.6%
- Operating costs$36.0M0.2%
- Operating income$2.03B11.8%
- Interest, other & tax−$484.0M2.8%
- Net income$1.54B9.0%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 23, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $17.20B$15.13B | +13.7% |
| Cost of Revenue | $15.20B$13.08B | +16.2% |
| Gross Profit | $1.99B$2.05B | −2.6% |
| Operating Income | $2.03B$2.04B | −0.4% |
| Interest Expense | $255.00M$202.00M | +26.2% |
| Net Income | $1.54B$1.69B | −8.5% |
| EPS (Basic) | $6.42$6.63 | −3.2% |
| EPS (Diluted) | $6.39$6.61 | −3.3% |
| Shares Outstanding (Basic) | 240.70M254.70M | −5.5% |
| Shares Outstanding (Diluted) | 241.60M255.70M | −5.5% |
05—Questions
Frequently Asked Questions
What was the primary driver for the increase in net sales?
The primary driver for the increase in net sales was higher product sales across all segments, notably in Missiles and Fire Control (MFC) due to production ramp-up on key missile programs like GMLRS and HIMARS, and in Aeronautics due to higher volume on classified programs and the F-35 program. Service sales also saw an increase driven by higher volumes in Aeronautics, Rotary and Mission Systems (RMS), and Space.
Why did net earnings decrease despite higher sales?
Net earnings decreased primarily due to a $100 million reach-forward loss recognized in the Missiles and Fire Control (MFC) segment for an option on a classified program, and an unfavorable profit adjustment on the HELLFIRE program. Additionally, higher interest expense resulting from recent debt issuances and a decrease in non-service FAS pension income compared to the prior year contributed to the decline.
How is the company managing supply chain disruptions and inflation?
Lockheed Martin is actively working to mitigate supply chain issues and inflationary pressures by supporting small businesses and at-risk suppliers, deploying resources to work with its supply chain, executing long-term contracts, identifying alternative sources, and optimizing its supply chain organization. The company also aims to improve operational efficiency and cost competitiveness to offset some cost increases.
What is the significance of the $2.0 billion debt issuance?
The $2.0 billion debt issuance in January 2024 provides the company with additional financial flexibility, strengthens its liquidity, and diversifies its funding sources. The proceeds are generally available for corporate purposes, including potential investments, share repurchases, and debt management.
06—Continue