Core Viewpoint - Lockheed Martin reported mixed Q4 2024 results, with revenues missing expectations but earnings exceeding estimates, leading to an 8% drop in stock price post-announcement [1][6]. Financial Performance - Q4 2024 revenues were $18.6 billion, reflecting a 1.3% year-over-year decline, while adjusted earnings were $7.58 per share, compared to consensus estimates of $18.8 billion and $6.62 respectively [1][3]. - The company faced a $1.7 billion pre-tax loss from classified programs, significantly impacting the bottom line, which fell to $2.22, a 71% year-over-year decline [5]. Segment Analysis - The Missiles and Fire Control segment experienced an 8% sales growth, and Aeronautics sales increased by 5%, driven by higher F-35 production volumes [4]. - However, these gains were offset by a 10% decline in Rotary & Mission Systems sales and a 13% decline in the Space segment, attributed to lower production volumes in various programs [4]. Outlook - Lockheed Martin's 2025 sales forecast is $74.25 billion, with earnings expected at $27.15 per share, both below consensus estimates [5]. - The stock has shown volatility over the past four years, with returns of 3% in 2021, 40% in 2022, -4% in 2023, and 10% in 2024 [6]. Valuation - Current market price is around $460, with an estimated valuation of $515 per share, suggesting a potential upside of approximately 12% based on a forward P/E multiple of 19x [8].

Group 1 - The article emphasizes a dividend-focused value investment strategy that prioritizes capital preservation and steady income growth [1] - The author shares insights from a diversified dividend stock portfolio, highlighting high-quality value stocks that provide meaningful growth and long-term safety [1] Group 2 - The author has a beneficial long position in Lockheed Martin (LMT) shares, indicating a personal investment interest in the company [2] - The article is presented as a personal opinion and does not constitute investment or tax advice, reflecting the author's status as a private investor [3]

Core Viewpoint - Lockheed Martin is experiencing significant challenges despite being the largest defense contractor in the U.S., with stock prices declining sharply due to disappointing earnings and external pressures [1][4]. Financial Performance - For Q4 2024, Lockheed reported earnings per share (EPS) of $2.22, which fell drastically short of consensus estimates of $6.62 [5]. - Revenues for the quarter were $18.6 billion, below analyst expectations of $18.84 billion [5]. - The EPS represented a 70% decline from Q4 2023, where it was $7.58 [5]. Losses and Adjustments - The company incurred a $1.7 billion pre-tax loss on classified programs, which significantly impacted the reported EPS [6]. - After accounting for this one-time loss, the adjusted EPS was $6.67, slightly above analyst estimates [6]. Market Reaction - Following the earnings report, Lockheed's stock dropped 8.9% from $503.69 on January 27 to $458.46 by January 29 [2][4]. - The stock is now trading at levels comparable to mid-March 2024, indicating a prolonged downturn [2]. External Factors - Investor confidence has been shaken due to F-35 delivery delays and potential budget cuts from the government, particularly influenced by Elon Musk's criticisms of the F-35 program [3]. - Lockheed is facing significant headwinds as a major defense contractor, making it vulnerable to budgetary constraints [3]. Future Outlook - Despite the recent pullback, there may be potential for recovery as Lockheed has a substantial backlog of $176 billion, indicating ongoing demand and revenue reliability [7]. - Congressional support for the company has been noted, suggesting potential buying opportunities for investors [7].

Group 1 - Lockheed Martin Corporation's board of directors has authorized a first quarter 2025 dividend of $3.30 per share [1] - The dividend is scheduled to be payable on March 28, 2025, to shareholders on record as of the close of business on March 3, 2025 [1] Group 2 - Lockheed Martin is a global defense technology company focused on innovation and scientific discovery [2] - The company offers all-domain mission solutions and promotes a 21st Century Security® vision to deliver transformative technologies [2]

Financial Performance - For the year ended December 31, 2024, Lockheed Martin Corporation recorded net sales of $71.0 billion, an increase from $67.6 billion in 2023, representing a growth of approximately 3.5%[321]. - The total cost of sales for 2024 was $64.1 billion, up from $59.1 billion in 2023, leading to a gross profit of $6.9 billion compared to $8.5 billion in the previous year, indicating a decline of about 18.2%[332]. - Net earnings for 2024 were $5.3 billion, down from $6.9 billion in 2023, reflecting a decrease of approximately 23.0%[332]. - The diluted earnings per share for 2024 were $22.31, compared to $27.55 in 2023, marking a decline of about 19.1%[332]. - The comprehensive income for 2024 was $5.7 billion, a decrease from $6.1 billion in 2023, representing a decline of about 7.9%[334]. - Operating profit for 2024 was $7,013 million, down 17.5% from $8,507 million in 2023[418]. - Total net sales for 2024 reached $71,043 million, an increase of 5.8% from $67,571 million in 2023[418]. Assets and Liabilities - As of December 31, 2024, the total assets of Lockheed Martin Corporation amounted to $55.6 billion, an increase from $52.5 billion in 2023, representing a growth of approximately 6.0%[337]. - The aggregate obligation for qualified defined benefit pension plans was $27.2 billion, exceeding the fair value of plan assets of $22.4 billion, resulting in a net unfunded obligation of $4.8 billion[326]. - The company’s total debt increased to $21,557 million in 2024 from $18,723 million in 2023, representing a growth of approximately 9.8%[447]. - Long-term debt, net, rose to $19,627 million in 2024 compared to $17,291 million in 2023, an increase of about 13.6%[447]. - The company reported a significant increase in cash and cash equivalents, rising to $2.5 billion in 2024 from $1.4 billion in 2023, an increase of approximately 72.3%[337]. Revenue Sources - The F-35 program accounts for 26% of total consolidated net sales and 65% of Aeronautics' net sales in 2024[19]. - The U.S. Government accounted for $52,044 million of total net sales in 2024, which is about 73.3% of total sales, compared to $49,423 million in 2023[423]. - Aeronautics segment net sales increased to $28,618 million in 2024 from $27,474 million in 2023, a growth of 4.1%[418]. - Missiles and Fire Control segment net sales rose to $12,682 million in 2024, up 12.0% from $11,253 million in 2023[418]. - Rotary and Mission Systems segment net sales increased to $17,264 million in 2024, a rise of 6.3% compared to $16,239 million in 2023[418]. - Space segment net sales decreased slightly to $12,479 million in 2024 from $12,605 million in 2023, a decline of 1.0%[418]. Workforce and Employment - The company hired nearly 9,200 employees in 2024, including 3,900 college hires and interns during the 2023-24 academic year[29]. - Approximately 93% of the workforce is located in the U.S., with 19% covered by collective bargaining agreements[28]. - The company has a hybrid workforce model that supports flexible working arrangements, aiding in talent recruitment and retention[30]. Challenges and Risks - The company is facing supply chain challenges, including parts shortages and pricing escalations, which are expected to continue into 2025[25]. - The company is involved in environmental remediation at current and former facilities, but these costs are expected to be allowable under government contracts[43]. - The company actively manages counterparty exposure to minimize potential impacts from adverse developments with credit providers[310]. Investments and Acquisitions - The acquisition of Terran Orbital Corporation was completed for a total consideration of $314 million, with $231 million paid in cash[349]. - Goodwill recorded from the acquisition of Terran Orbital was $298 million, reflecting the excess purchase price over the fair value of net assets acquired[349]. - The company maintains investments in a trust totaling $1.8 billion as of December 31, 2024, which are reflected at fair value on the consolidated balance sheet[315]. Research and Development - Company-funded R&D costs charged to cost of sales totaled $1.6 billion, $1.5 billion, and $1.7 billion in 2024, 2023, and 2022 respectively[380]. - The company has various development programs for new and upgraded products, which are subject to significant variability in estimates of cost and time required to complete[372]. Environmental and Regulatory Compliance - The company is subject to various U.S. and international regulations affecting its operations, including environmental protection laws and climate change-related regulations[43][44]. - The company projects costs and recovery of environmental costs over approximately 20 years, with significant future implications for net sales and cost of sales[408]. Debt and Financing - The company issued $2,970 million in long-term debt, an increase from $1,975 million in 2023[341]. - The company entered into a $3.0 billion revolving credit facility, extendable to $3.5 billion, with no borrowings outstanding as of December 31, 2024[448]. - The company is in compliance with all covenants in its revolving credit agreement and debt agreements as of December 31, 2024[448].

Core Insights - Lockheed Martin Corporation (LMT) reported fourth-quarter 2024 adjusted earnings of $7.67 per share, exceeding the Zacks Consensus Estimate of $6.60 by 16.2%, although it was a slight decline of 0.4% from the previous year's adjusted figure of $7.70 per share [1][2] - The company achieved 2024 adjusted earnings of $28.47 per share, surpassing the year-ago figure of $27.69 and the Zacks Consensus Estimate of $26.70 [2] Operational Highlights - Net sales for the fourth quarter were $18.62 billion, missing the Zacks Consensus Estimate of $18.85 billion by 1.2% and down 1.3% from $18.87 billion in the same quarter last year [3] - For the full year 2024, sales reached $71.04 billion, an increase from $67.57 billion in 2023, but fell short of the Zacks Consensus Estimate of $71.27 billion [3] Backlog Information - As of December 31, 2024, LMT's backlog was $176.04 billion, up from $160.57 billion a year earlier, exceeding the projected backlog of $171.32 billion [4] - The Aeronautics segment accounted for $62.76 billion of the backlog, while the Missiles and Fire Control segment contributed $38.78 billion [4] Segment Performance - **Aeronautics**: Sales increased by 5.2% year over year to $8.01 billion, driven by higher sales volume from the F-35 program, but operating profit dropped 43% to $434 million [5] - **Missiles and Fire Control**: Quarterly sales rose 7.6% to $3.41 billion, but the segment incurred an operating loss of $804 million compared to a profit of $395 million in the prior year [6] - **Space**: Sales decreased by 13% to $2.94 billion due to lower sales from national security space programs, with operating profit down 7.8% to $283 million [7] - **Rotary and Mission Systems**: Revenues fell 9.6% to $4.26 billion, primarily due to lower sales from Sikorsky helicopter programs [8][9] Financial Condition - Cash and cash equivalents totaled $2.48 billion at the end of 2024, up from $1.44 billion at the end of 2023 [10] - Cash from operating activities was $6.97 billion, down from $7.92 billion a year ago, while long-term debt increased to $19.63 billion from $17.29 billion [10] 2025 Guidance - Lockheed expects sales in the range of $73.75-$74.75 billion for 2025, with the Zacks Consensus Estimate at $73.99 billion [11] - The company projects adjusted earnings per share between $27.00-$27.30, while the consensus estimate is at $27.78 per share [11] - Expected cash from operations is projected to be between $8.50-$8.70 billion, with capital expenditure around $1.90 billion [12]

Core Insights - Lockheed Martin reported mixed Q4 2024 earnings, with earnings per share (EPS) of $2.22, significantly below the estimated $6.62, primarily due to losses in classified programs [2][7] - Total revenue for the quarter was $18.6 billion, slightly missing analysts' expectations of $18.87 billion [2][4] - The company achieved a record backlog of $176 billion, indicating strong future demand [3][10] Financial Performance - EPS decreased by 70.7% year-over-year from $7.58 in Q4 2023 to $2.22 in Q4 2024 [4] - Revenue fell by 1.3% year-over-year from $18.9 billion in Q4 2023 to $18.6 billion in Q4 2024 [4] - Free cash flow dropped to $441 million from nearly $1.7 billion a year earlier, a decline of 73.5% [4][9] - Net earnings decreased by 71.8% year-over-year, from $1.866 billion in Q4 2023 to $527 million in Q4 2024 [4] Business Segments - The Aeronautics segment saw a 5% increase in sales, but operating profits fell by 43% due to challenges in classified programs [8] - The Missiles and Fire Control segment experienced an 8% rise in net sales, yet operating profits turned into a loss of $804 million from a previous profit of $395 million [8] Strategic Focus - Lockheed Martin is concentrating on classified programs and advancements in hypersonics technology, aiming to transition these projects into production phases for long-term growth [6][11] - The company is projecting net sales between $73.75 billion and $74.75 billion for 2025, with expectations of improved operating profit across business segments [11]

January 28, 2025 at: www.lockheedmartin.com/investor January 28, 2025 through midnight January 29, 2025 4 th Quarter 2024 Conference Call January 28, 2025 Webcast login at: James D. Taiclet Chairman, President and CEO Chief Financial Officer Jay Malave Maria Ricciardone Vice President, Treasurer & Investor Relations www.lockheedmartin.com/investor Webcast replay & podcast available by 2:00 p.m. ET Audio replay available from 2:00 p.m. ET 1 Forward-Looking Statements This presentation contains statements tha ...

Company Performance - Lockheed Martin reported quarterly earnings of $7.67 per share, exceeding the Zacks Consensus Estimate of $6.60 per share, but down from $7.90 per share a year ago, representing an earnings surprise of 16.21% [1] - The company posted revenues of $18.62 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 1.24% and down from $18.87 billion year-over-year [2] - Over the last four quarters, Lockheed has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Outlook - Lockheed shares have increased approximately 3.7% since the beginning of the year, outperforming the S&P 500's gain of 2.2% [3] - The current consensus EPS estimate for the upcoming quarter is $6.59 on revenues of $17.64 billion, and for the current fiscal year, it is $27.78 on revenues of $73.99 billion [7] - The estimate revisions trend for Lockheed is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Aerospace - Defense industry is currently in the bottom 40% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry outlook can significantly affect stock performance [5][8]

About this content About Oliver Haill Oliver has been writing about companies and markets since the early 2000s, cutting his teeth as a financial journalist at Growth Company Investor with a focusing on AIM companies and small caps, before a few years later becoming a section editor and then head of research. He joined Proactive after a couple of years freelancing, where he worked for the Financial Times Group, ITV, Press Association, Reuters sports desk, the London Olympic News Service, Rugby World Cup ...