By Lockheed Martin Corporation
Net sales of $18.1 billion, an increase of 9% year over year
Net earnings of $1.6 billion, or $6.85 per share, inclusive of net non-operational charges of $79 million ($63 million, or $0.26 per share, after-tax)
Cash from operations of $1.9 billion and free cash flow of $1.5 billion
$1.6 billionof cash returned to shareholders through dividends and share repurchases
2024 outlook increased for sales, segment operating profit and earnings per share
BETHESDA, Md., July 23, 2024 /PRNewswire/ — Lockheed Martin Corporation [NYSE: LMT] today reported second quarter 2024 net sales of $18.1 billion, compared to $16.7 billion in the second quarter of 2023. Net earnings in the second quarter of 2024 were $1.6 billion, or $6.85 per share, compared to $1.7 billion, or $6.63 per share, in the second quarter of 2023. Cash from operations was $1.9 billion in the second quarter of 2024, compared to $1.1 billion in the second quarter of 2023. Free cash flow was $1.5 billion in the second quarter of 2024, compared to $771 million in the second quarter of 2023.
“Over the past few months, Lockheed Martin’s people, systems, and platforms have again demonstrated their ability to enhance security in Eastern Europe, the Red Sea, and the Middle East. From the PAC-3’s critical role in air defense, to the Aegis Combat System with AI augmentation, to the F-35 with its advanced sensor and data management capabilities, our company has made major contributions to allied and partner defense. We continue to demonstrate the impact of our 21st Century Security® strategy by harnessing the latest digital technologies to continuously improve mission effectiveness, strengthening and scaling the defense production system, and expanding industrial cooperation among our allies and partners. Consequently, demand for our defense technology solutions remains robust, with a backlog of nearly $160 billion, greater than two times annual revenue,” said Lockheed Martin Chairman, President and CEO Jim Taiclet.
“We delivered strong second quarter financial results, with year-over-year growth of 9% in sales and 10% in segment operating profit, and free cash flow generation in excess of $1.5 billion. The year-to-date performance gives us confidence to raise our 2024 full-year outlook for sales, segment operating profit, and earnings per share. Operationally, the F-35 remains a top priority, and we recently delivered the first Technology Refresh 3-configured aircraft to the customer and anticipate deliveries for 2024 to meet our expected range of 75-110 F-35s. The TR-3 hardware and software update enables step function improvement in capability to our airmen, sailors, and marines, as well as to our partner and allied nations. This foundational upgrade and the follow-on series of enhancements, known as Block 4, are critical steps in ensuring the F-35 remains the most advanced fighter aircraft in the world and the key air vehicle node in the DoD’s joint all domain architecture.”
Summary Financial Results
The following table presents the company’s summary financial results.
(in millions, except per share data)
Quarters Ended
Six Months Ended
June 30,
2024
June 25,
2023
June 30,
2024
June 25,
2023
Net sales
$ 18,122
$ 16,693
$ 35,317
$ 31,819
Business segment operating profit1
$ 2,042
$ 1,855
$ 3,787
$ 3,537
Unallocated items
FAS/CAS operating adjustment
406
416
812
831
Impairment and severance charges2
(87)
—
(87)
—
Intangible asset amortization expense
(61)
(62)
(122)
(124)
Other, net
(152)
(74)
(213)
(72)
Total unallocated items
106
280
390
635
Consolidated operating profit
$ 2,148
$ 2,135
$ 4,177
$ 4,172
Net earnings3
$ 1,641
$ 1,681
$ 3,186
$ 3,370
Diluted earnings per share3
$ 6.85
$ 6.63
$ 13.24
$ 13.24
Cash from operations4
$ 1,876
$ 1,100
$ 3,511
$ 2,664
Capital expenditures
(370)
(329)
(748)
(623)
Free cash flow1,4
$ 1,506
$ 771
$ 2,763
$ 2,041
1
Business segment operating profit and free cash flow are non-GAAP measures. See the “Use of Non-GAAP Financial Measures” section of this news release for more information.
2
Impairment and severance charges for the quarter ended June 30, 2024 include $87 million ($69 million, or $0.29 per share, after-tax) trademark and fixed asset impairments as well as severance costs at the company’s RMS business segment.
3
Net earnings for the quarter ended June 30, 2024 include $79 million ($63 million, or $0.26 per share, after-tax) of net non-operational charges, including Impairment and severance charges described above. See “Adjusted earnings before income taxes, net earnings and diluted EPS” table for further details.
4
See the “Cash Flows and Capital Deployment Activities” section of this news release for more information.
2024 Financial Outlook
The following table and other sections of this news release contain forward-looking statements, which are based on the company’s current expectations. Actual results may differ materially from those projected. It is the company’s practice not to incorporate adjustments into its financial outlook for proposed or potential acquisitions, divestitures, ventures, pension risk transfer transactions, financing transactions, changes in law, or new accounting standards until such items have been consummated, enacted or adopted. For additional factors that may impact the company’s actual results, refer to the “Forward-Looking Statements” section in this news release.
(in millions, except per share data)
Current Update
April 2024
Net sales
$70,500 – $71,500
$68,500 – $70,000
Business segment operating profit1
$7,350 – $7,500
$7,175 – $7,375
Total FAS/CAS pension adjustment
~$1,685
~$1,685
Diluted earnings per share2
$26.10 – $26.60
$25.65 – $26.35
Cash from operations
$7,750 – $8,050
$7,750 – $8,050
Capital expenditures
~$1,750
~$1,750
Free cash flow1
$6,000 – $6,300
$6,000 – $6,300
1
Business segment operating profit and free cash flow are non-GAAP measures. See the “Use of Non-GAAP Financial Measures” section of this news release for more information.
2
Although the company typically does not update its outlook for proposed changes in law, the above includes the effect of IRS Notice 2023-63 confirming that certain expenditures incurred in the performance of cost-type contracts are not subject to capitalization for tax purposes. The company believes incorporating the clarification from the Notice more accurately reflects its expectations because the Notice describes the tax treatment of certain expenditures in accordance with the company’s analysis of the Internal Revenue Code.
Cash Flows and Capital Deployment Activities
The increase in operating and free cash flows in the second quarter of 2024 compared to the same period in 2023 was primarily due to improvements in working capital (defined as receivables, contract assets, and inventories less accounts payable and contract liabilities) and the timing of federal tax payments. Improvements in working capital were driven by volume and timing of milestone payments impacting both contract liabilities and contract assets on classified programs at the company’s Space business segment, decreases in inventory due to deliveries of S-70 helicopters at Sikorsky at the company’s RMS business segment, and production and billing cycle timing impacting receivables (primarily F-35 at Aeronautics and Integrated Air and Missile Defense at MFC, partially offset by Integrated warfare systems and sensors at RMS). These improvements were partially offset by the timing of cash payments related to accounts payable (primarily Aeronautics).
The company’s cash activities in the second quarter of 2024, included the following:
paying cash dividends of $752 million;
paying $850 million to repurchase 1.9 million shares; and
making a long-term debt scheduled repayment of $168 million.
Segment Results
The company operates in four business segments organized based on the nature of products and services offered: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. The following table presents summary operating results of the company’s business segments and reconciles these amounts to the company’s consolidated financial results.
(in millions)
Quarters Ended
Six Months Ended
June 30,
2024
June 25,
2023
June 30,
2024
June 25,
2023
Net sales
Aeronautics
$ 7,277
$ 6,875
$ 14,122
$ 13,144
Missiles and Fire Control
3,102
2,755
6,095
5,143
Rotary and Mission Systems
4,548
3,897
8,636
7,407
Space
3,195
3,166
6,464
6,125
Total net sales
$ 18,122
$ 16,693
$ 35,317
$ 31,819
Operating profit
Aeronautics
$ 751
$ 718
$ 1,430
$ 1,393
Missiles and Fire Control
450
371
761
748
Rotary and Mission Systems
495
454
925
804
Space
346
312
671
592
Total business segment operating
profit
2,042
1,855
3,787
3,537
Unallocated items
FAS/CAS operating adjustment
406
416
812
831
Impairment and severance charges
(87)
—
(87)
—
Intangible asset amortization
expense
(61)
(62)
(122)
(124)
Other, net
(152)
(74)
(213)
(72)
Total unallocated items
106
280
390
635
Total consolidated operating profit
$ 2,148
$ 2,135
$ 4,177
$ 4,172
For information on factors impacting comparability of the company’s segment sales, operating profit and operating margins, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2023.
The company’s consolidated net favorable profit booking rate adjustments represented approximately 21% and 20% of total segment operating profit in the quarters ended June 30, 2024 and June 25, 2023. During the quarter ended June 25, 2023, we recognized a favorable profit adjustment of $65 million on an international surveillance and control program due to the positive resolution of a contractual matter, and an unfavorable profit adjustment of $100 million on the Canadian Maritime Helicopter Program (CMHP) as a result of increased costs and lower than planned revenues.
Aeronautics
(in millions)
Quarters Ended
Six Months Ended
June 30,
2024
June 25,
2023
June 30,
2024
June 25,
2023
Net sales
$ 7,277
$ 6,875
$ 14,122
$ 13,144
Operating profit
751
718
1,430
1,393
Operating margin
10.3 %
10.4 %
10.1 %
10.6 %
Aeronautics’ net sales in the second quarter of 2024 increased $402 million, or 6%, compared to the same period in 2023. The increase was primarily attributable
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