01—Abstract
Summary
Summary of the 8-K filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Lockheed Martin reported first quarter 2024 results on April 23, 2024, with net sales of $17.2 billiona, up 14% from $15.1 billion a year earlier.
The quarter included 13 weeks versus 12 in the prior-year period, which flatters the year-over-year comparison. GAAP net earnings were $1.5 billionb, or $6.39 per diluted share, down from $1.7 billion, or $6.61, a year earlier. Excluding mark-to-market investment gains, adjusted diluted EPS was $6.33 versus $6.43.
Consolidated operating profit was roughly flat at $2.03 billionc, and total business segment operating margin declined to 10.1% from 11.1%, pressured by a $100 million reach-forward loss on a classified Missiles and Fire Control program and lower favorable profit booking rate adjustments, which fell to about 11% of segment operating profit from 25%. Cash generation was steady. Cash from operations was $1.6 billion and free cash flow was $1.3 billion, both essentially unchanged year over year.
Capital deployment was substantial: the company paid $780 milliond in dividends and $1.0 billion to repurchase 2.3 million shares, while issuing $2.0 billion of senior notes. Cash rose to $2.8 billion, but total debt increased to roughly $19.4 billion, and the share count fell to 239 million from 254 million year over year. Management reaffirmed its full-year 2024 outlook, including net sales of $68.5-70.0 billion, diluted EPS of $25.65-26.35, and free cash flow of $6.0-6.3 billion.
The backlog stood at a record-level $159.4 billion, with notable National Security Space awards in the quarter. Space and Rotary and Mission Systems posted strong growth, while Aeronautics margins held near 10% and MFC profitability weakened. Investors should watch whether MFC margins recover, the pace of F-35 and TR-3 deliveries, and the impact of rising leverage on capital return flexibility.
02—Key points
Key Highlights
- Net sales rose 14% year over year to $17.2 billion, aided by an extra week in the quarter (13 weeks versus 12).
- GAAP diluted EPS was $6.39, down from $6.61; adjusted EPS (excluding mark-to-market investment gains) was $6.33 versus $6.43.
- Missiles and Fire Control operating profit fell 18% on a $100 million reach-forward loss on a classified program; MFC operating margin dropped to 10.4% from 15.8%.
- Rotary and Mission Systems operating profit rose 23% and Space rose 16%, with total business segment operating profit up 4% to $1.75 billion.
- Free cash flow of $1.3 billion was flat year over year; the company returned $1.8 billion to shareholders through $780 million in dividends and $1.0 billion in buybacks.
- The company issued $2.0 billion of senior notes, lifting long-term debt to $19.25 billion from $17.29 billion at year-end 2023.
- Full-year 2024 outlook was reaffirmed, including diluted EPS of $25.65-26.35 and free cash flow of $6.0-6.3 billion; backlog ended the quarter at a record $159.4 billion.
03—Questions
Frequently Asked Questions
Why did EPS decline even though sales grew 14%?
Consolidated operating profit was flat at about $2.03 billion because segment margins compressed, mainly at Missiles and Fire Control, where a $100 million reach-forward loss and lower favorable profit adjustments hit results. Non-service pension income also fell from $110 million to $16 million, and interest expense rose from $202 million to $255 million, which together offset the sales growth.
Is the 2024 outlook still intact after the first quarter?
Yes. Management reaffirmed its 2024 guidance, including net sales of $68.5-70.0 billion, business segment operating profit of $7.175-7.375 billion, diluted EPS of $25.65-26.35, and free cash flow of $6.0-6.3 billion. The outlook excludes future mark-to-market gains or losses on investments and deferred compensation.
How is the company's balance sheet and leverage changing?
Long-term debt increased to $19.25 billion from $17.29 billion after the $2.0 billion note issuance, while cash rose to $2.79 billion. Stockholders' equity fell to $6.65 billion, and accumulated other comprehensive loss remained large at about $8.8 billion, mainly reflecting pension obligations. Leverage is higher, so investors may want to monitor how debt levels affect future buyback and dividend capacity.
What drove the strong backlog and what risks remain?
Backlog reached $159.4 billion, supported by several large National Security Space awards and growth in Space backlog to $33.0 billion. Key risks include dependence on U.S. Government funding and budget uncertainty, execution on fixed-price development programs such as classified programs, potential further reach-forward losses, and progress on the F-35 TR-3 configuration, whose first configured aircraft is still pending delivery.
Why did the share count drop so much?
Diluted weighted average shares fell to 241.6 million from 255.7 million, and shares outstanding at quarter-end were 239 million versus 254 million a year earlier. The company repurchased 2.3 million shares for $1.0 billion during the quarter, which supports per-share metrics even when net earnings decline in absolute terms.
04—Continue