Core Insights - Lockheed Martin reported Q3 2024 revenues of $17.1 billion, a 1% year-over-year increase, and adjusted earnings of $6.84 per share, exceeding estimates of $17.0 billion and $6.50 respectively [2][3] Financial Performance - Aeronautics segment sales declined by 3% due to lower F-35 production contracts [2] - Missiles and Fire Control segment sales increased by 8% driven by higher production for Guided Multiple Launch Rocket Systems and Long Range Anti-Ship Missile programs [2] - Rotary and Mission Systems sales rose by 6% due to increased demand for integrated warfare systems and sensors [2] - Space segment revenue fell by 1% due to lower volume for the Orion program [2] - Operating margin improved by 40 basis points to 12.5%, contributing to a 1% year-over-year rise in earnings per share [2] Outlook and Valuation - Lockheed Martin raised its full-year sales outlook to $71.25 billion and earnings to $26.65 per share, up from previous guidance of $71.0 billion and $26.35 [2] - The company's valuation is estimated at $572 per share, based on a 21x P/E multiple, which is higher than its average P/E multiple of 17x over the last five years [4] Stock Performance - Despite better-than-expected earnings, Lockheed Martin's stock fell by 6% following the Q3 results due to a top-line miss against consensus estimates [3] - The stock has risen 29% year-to-date, outperforming broader market gains of 23% [5] - Lockheed Martin's stock performance has been volatile compared to the S&P 500 over the last three years [5]

If you want full access to all our reports, data and investing ideas, join The Aerospace Forum , the #1 aerospace, defense and airline investment research service on Seeking Alpha, with access to evoX Data Analytics, our inhouse developed data analytics platform. Lockheed Martin (NYSE: LMT ) reported earnings on the 22 nd of October, and the results and outlook were not well received by investors. Lockheed Martin stock closed the trading day down more than 6% to $576.98. In this report, I will be Dhierin ru ...

Financial Data and Key Metrics Changes - Sales for Q3 2024 were $17.1 billion, up 1% year-over-year, with a normalized growth of 5% when accounting for delayed revenue recognition of approximately $700 million related to the F-35 program [12][4] - Segment operating profit increased by 3% year-over-year to $1.9 billion, with consolidated margins at 10.9% [12][4] - Free cash flow was $2.1 billion for the quarter, contributing to a year-to-date total of over $4.8 billion [13][4] - GAAP earnings per share rose to $6.80, reflecting a 1% increase year-over-year [12] Business Line Data and Key Metrics Changes - Aeronautics sales decreased by 3% year-over-year, primarily due to lower F-35 volume, while C-130 and F-16 programs partially offset this decline [17] - Missiles & Fire Control (MFC) saw an 8% increase in sales year-over-year, driven by production ramps in precision fires programs [19] - Rotary & Mission Systems (RMS) sales increased by 6% to $4.4 billion, primarily due to higher volume in integrated warfare systems and Sikorsky programs [20] - Space segment sales decreased slightly year-over-year, but operating profit increased by 5% due to a favorable mix [21] Market Data and Key Metrics Changes - The company ended Q3 with a record backlog of over $165 billion, reflecting a book-to-bill ratio of 1.3 [4][13] - MFC's book-to-bill ratio was a strong 2.7, contributing to a record backlog exceeding $40 billion [19] Company Strategy and Development Direction - The company is investing heavily in autonomy, AI, and digital technologies to enhance capabilities across its platforms, including the F-35 [6][7] - A teaming agreement with General Dynamics was signed for the production of solid rocket motors, aimed at increasing production capacity and strengthening the defense supply chain [8] - The company is expanding international collaborations to develop indigenous military capabilities in countries like Australia, Germany, Poland, and India [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future cash generation prospects, leading to a 5% increase in the quarterly dividend and an extension of share repurchase authorization [4] - The company anticipates sales growth of approximately 5% for 2024, with segment operating profit expected to reach approximately $7.475 billion [23] - Management highlighted the importance of maintaining production momentum despite ongoing negotiations for F-35 Lot 18 and 19 contracts [58] Other Important Information - The company delivered 48 F-35 aircraft in Q3 and expects to deliver between 90 to 110 aircraft in 2024 [5] - The U.S. defense budget is currently under a continuing resolution, which will fund government operations through December 20, 2024 [9] Q&A Session Summary Question: Current situation in tactical fighter world and NGAD - Management is preserving optionality based on U.S. government strategy for tactical fighter deployment and is investing in technologies for sixth-generation aircraft [30][32] Question: Ranking of segments for medium-term growth - MFC is expected to lead growth with high-single-digit growth, while other segments will see low-single-digit growth [36][37] Question: MFC margin performance - Year-to-date performance in MFC is better than the prior year, with a good quarter showing 14.4% margins [40][41] Question: Update on CCA and ARRW classified contract - The company is investing heavily in autonomy and AI for CCA, while the ARRW program has seen incremental risk and losses [45][47] Question: F-35 Lot 18 and 19 negotiations and cash implications - The company is managing the complexities of F-35 production and negotiations, emphasizing the importance of industry and government collaboration [58][63]

Core Insights - Lockheed Martin missed revenue estimates due to a decline in aerospace sales related to contractual and funding issues for the F-35 fighter jet [1] - Despite the revenue miss, the company raised its full-year profit outlook [2] - Shares of Lockheed Martin fell from their all-time high set the previous day [1] Financial Performance - The company reported third-quarter revenue of $17.10 billion, a 1% year-over-year increase, but below the expected $17.38 billion [1] - Earnings per share (EPS) were reported at $6.80, exceeding forecasts [1] - The Aeronautics unit sales decreased by 3% to $6.49 billion, primarily due to delays in F-35 funding [1] - Revenue from the Space division fell less than 1% to $3.08 billion, while the Missiles and Fire Control segment saw an 8% increase to $3.18 billion, and Rotary and Mission Systems unit revenue rose by 6% to $4.37 billion [1] Outlook Adjustments - The company raised its full-year EPS outlook to $26.65 from a previous range of $26.10 to $26.60 [2] - Revenue outlook was narrowed to $71.25 billion from a previous range of $70.50 billion to $71.50 billion [2] - Despite a decline of approximately 5% in shares, they remain up nearly 30% year-to-date [2]

Lockheed Martin (LMT) reported $17.1 billion in revenue for the quarter ended September 2024, representing a year-over-year increase of 1.3%. EPS of $6.84 for the same period compares to $6.77 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $17.28 billion, representing a surprise of -1.05%. The company delivered an EPS surprise of +5.72%, with the consensus EPS estimate being $6.47.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- ...

Weak revenue growth mars an otherwise solid quarter. Lockheed Martin (LMT -5.38%) beat on earnings but missed on revenue because of F-35 delivery delays, and narrowed its full-year guidance. Investors were underwhelmed by the news, sending Lockheed shares down 5% as of 10:30 a.m. ET. A solid quarter beneath the surface Lockheed Martin, the world's largest defense contractor, earned $6.80 per share on sales of $17.1 billion in the third quarter. That's a mixed result relative to Wall Street's $6.50 per share ...

Lockheed Martin Corporation (LMT) reported third-quarter 2024 adjusted earnings of $6.84 per share, which beat the Zacks Consensus Estimate of $6.47 by 5.7%. The bottom line also rose 1% from the year-ago quarter's recorded figure of $6.77. The company reported GAAP earnings of $6.80 per share compared with $6.73 a year ago. The year-over-year bottom-line improvement can be attributed to solid sales growth and operating profit increase. Operational Highlights Net sales were $17.10 billion, which missed the ...

Lockheed Martin (LMT) came out with quarterly earnings of $6.84 per share, beating the Zacks Consensus Estimate of $6.47 per share. This compares to earnings of $6.77 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 5.72%. A quarter ago, it was expected that this aerospace and defense company would post earnings of $6.45 per share when it actually produced earnings of $7.11, delivering a surprise of 10.23%.Over the last four qu ...

[Third Quarter 2024 Financial Highlights](index=1&type=section&id=Lockheed%20Martin%20Reports%20Third%20Quarter%202024%20Financial%20Results) Lockheed Martin reported strong Q3 2024 financial results, including increased net sales and EPS, alongside strategic advancements and a raised full-year outlook [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Lockheed Martin reported Q3 2024 net sales of **$17.1 billion**, a **1%** year-over-year increase, with **$1.6 billion** in net earnings and **$2.1 billion** in free cash flow Q3 2024 Key Financial Metrics | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $17.1 billion | $16.9 billion | +1% | | Net Earnings | $1.6 billion | $1.7 billion | -5.9% | | Diluted EPS | $6.80 | $6.73 | +1.0% | | Cash from Operations | $2.4 billion | $2.9 billion | -17.2% | | Free Cash Flow | $2.1 billion | $2.5 billion | -16.0% | - Returned **$1.6 billion** to shareholders through **$749 million** in dividends and **$850 million** in share repurchases[1](index=1&type=chunk)[12](index=12&type=chunk) - The quarterly dividend was increased by **5%** to **$3.30 per share**, marking the **22nd** consecutive year of increases[1](index=1&type=chunk)[3](index=3&type=chunk) - Share repurchase authority was increased by **$3.0 billion**, bringing the total authorization to **$10.3 billion**[1](index=1&type=chunk)[13](index=13&type=chunk) [CEO Statement and Corporate Strategy](index=1&type=section&id=CEO%20Statement%20and%20Corporate%20Strategy) CEO Jim Taiclet highlighted a record backlog of over **$165 billion** and strong operational performance, advancing the 21st Century Security® strategy for future growth - The company achieved a record backlog of over **$165 billion** and delivered **48** F-35s in the third quarter[2](index=2&type=chunk) - The 21st Century Security® strategy focuses on three key initiatives: - Strengthening production system resiliency and scalability - Accelerating digital and physical technologies into mission solutions and operations - Expanding international partnerships to increase production capacity and sales[3](index=3&type=chunk) [Financial Summary and Key Updates](index=2&type=section&id=Summary%20Financial%20Results) This section details consolidated financial performance for Q3 2024 and updates on the F-35 Lots 18-19 contract negotiations [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) Q3 2024 consolidated operating profit rose to **$2.14 billion**, while net earnings slightly decreased to **$1.62 billion** compared to Q3 2023 Summary Financial Results (in millions, except per share data) | Metric | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $17,104 | $16,878 | $52,421 | $48,697 | | Business segment operating profit | $1,870 | $1,810 | $5,657 | $5,347 | | Consolidated operating profit | $2,140 | $2,042 | $6,317 | $6,214 | | Net earnings | $1,623 | $1,684 | $4,809 | $5,054 | | Diluted earnings per share | $6.80 | $6.73 | $20.05 | $19.97 | | Free cash flow | $2,083 | $2,527 | $4,846 | $4,568 | [F-35 Lots 18-19 Contract Update](index=2&type=section&id=F-35%20Lots%2018-19%20Contract%20Update) Negotiations for the F-35 Lots 18-19 production contract are ongoing, causing a **$400 million** negative impact on Q3 2024 revenue and profit recognition - The company could not recognize revenue and profit on approximately **$400 million** of costs incurred on the F-35 program in Q3 2024 due to contract negotiation delays[7](index=7&type=chunk) - Cash flow was negatively impacted, with the company prevented from invoicing and receiving approximately **$450 million** through Q3 2024[7](index=7&type=chunk) - The company expects to receive contractual authorization and funding in Q4 2024, which would allow for the recovery of sales, profit, and cash[7](index=7&type=chunk) [2024 Financial Outlook](index=3&type=section&id=2024%20Financial%20Outlook) Lockheed Martin has raised its full-year 2024 financial outlook for key metrics, contingent on the F-35 Lots 18-19 contract authorization [Updated Guidance](index=3&type=section&id=Updated%20Guidance) The company increased its 2024 outlook, now expecting net sales of approximately **$71.25 billion**, segment operating profit of about **$7.475 billion**, and diluted EPS around **$26.65** 2024 Financial Outlook (in millions, except per share data) | Metric | Current Update (Oct 2024) | Prior Guidance (July 2024) | | :--- | :--- | :--- | | Net sales | ~$71,250 | $70,500 - $71,500 | | Business segment operating profit | ~$7,475 | $7,350 - $7,500 | | Diluted earnings per share | ~$26.65 | $26.10 - $26.60 | | Free cash flow | ~$6,200 | $6,000 - $6,300 | - The updated 2024 financial outlook is premised on receiving contractual authorization and funding for the F-35 Lots 18-19 production contract in Q4 2024[10](index=10&type=chunk) [Cash Flow and Capital Deployment](index=4&type=section&id=Cash%20Flows%20and%20Capital%20Deployment%20Activities) Q3 2024 cash flows decreased due to F-35 contract delays, while the company continued significant capital returns through dividends and share repurchases [Cash Flow Analysis](index=4&type=section&id=Cash%20Flow%20Analysis) The decrease in Q3 2024 operating and free cash flows was primarily driven by a reduction in working capital due to the F-35 Lots 18-19 contract delay - The primary reason for the decrease in operating and free cash flows in Q3 2024 was a reduction in working capital, which includes the cash impacts from the F-35 Lots 18-19 contract delay[12](index=12&type=chunk) [Capital Deployment](index=4&type=section&id=Capital%20Deployment) The company returned **$1.6 billion** to shareholders in Q3 2024 through dividends and share repurchases, increasing its dividend and repurchase authorization Q3 2024 Capital Deployment Activities | Activity | Amount | | :--- | :--- | | Cash Dividends Paid | $749 million | | Share Repurchases | $850 million (1.5 million shares) | - The board increased the total share repurchase authorization to **$10.3 billion**[13](index=13&type=chunk) - A fourth-quarter dividend of **$3.30 per share** was authorized, a **$0.15** increase over the prior quarter[13](index=13&type=chunk) [Segment Results](index=5&type=section&id=Segment%20Results) In Q3 2024, MFC and RMS drove sales growth, while Aeronautics sales declined due to F-35 contract delays, and Space saw a slight decrease [Aeronautics](index=6&type=section&id=Aeronautics) Aeronautics' net sales decreased **3%** to **$6.5 billion** in Q3 2024, primarily due to a **$480 million** reduction in the F-35 program from contract delays Aeronautics Financials (in millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $6,487 | $6,717 | -3% | | Operating Profit | $659 | $671 | -2% | | Operating Margin | 10.2% | 10.0% | +20 bps | - Net sales decreased primarily due to lower volume on F-35 production contracts (**$480 million**) because of delays in the Lots 18-19 contract[20](index=20&type=chunk) - Operating profit was impacted by a **$25 million** decrease from lower volume and **$20 million** from unfavorable contract mix, but was partially offset by **$30 million** in higher profit booking adjustments, including an **$85 million** favorable adjustment on the C-5 Galaxy program[21](index=21&type=chunk) [Missiles and Fire Control (MFC)](index=7&type=section&id=Missiles%20and%20Fire%20Control) MFC delivered strong growth in Q3 2024, with net sales increasing **8%** to **$3.2 billion**, driven by tactical and strike missile programs MFC Financials (in millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,175 | $2,939 | +8% | | Operating Profit | $456 | $398 | +15% | | Operating Margin | 14.4% | 13.5% | +90 bps | - Sales growth was driven by a ramp-up in production for GMLRS and LRASM programs[23](index=23&type=chunk) - Operating profit increased due to higher profit booking rate adjustments (**$35 million**), primarily from better cost performance on PAC-3, and higher volume (**$20 million**)[24](index=24&type=chunk) [Rotary and Mission Systems (RMS)](index=8&type=section&id=Rotary%20and%20Mission%20Systems) RMS net sales grew **6%** to **$4.4 billion** in Q3 2024, led by higher volume in IWSS and Sikorsky helicopter programs, while operating profit remained flat RMS Financials (in millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $4,367 | $4,121 | +6% | | Operating Profit | $483 | $482 | ~0% | | Operating Margin | 11.1% | 11.7% | -60 bps | - Sales increased due to higher volume on radar programs, the Canadian Surface Combatant (CSC) program, and higher production on CH-53K, Seahawk, and Black Hawk helicopters[26](index=26&type=chunk) - Operating profit was flat as higher volume benefits were offset by lower profit booking adjustments, including a reach-forward loss on a radar program[27](index=27&type=chunk) [Space](index=9&type=section&id=Space) Space segment net sales decreased slightly by **1%** to **$3.1 billion** in Q3 2024, while operating profit increased **5%** due to a favorable contract mix Space Financials (in millions) | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,075 | $3,101 | -1% | | Operating Profit | $272 | $259 | +5% | | Operating Margin | 8.8% | 8.4% | +40 bps | - Net sales decrease was driven by lower volume on the Orion program, partially offset by higher volume on reentry programs[29](index=29&type=chunk) - Operating profit increased due to a **$25 million** benefit from favorable contract mix, partially offset by a **$10 million** reduction in equity earnings from ULA[30](index=30&type=chunk) [Supplementary Financial Information](index=10&type=section&id=Supplementary%20Financial%20Information) This section provides details on income taxes and the company's use of non-GAAP financial measures, including reconciliations [Income Taxes](index=10&type=section&id=Income%20Taxes) The effective income tax rate for Q3 2024 was **15.4%**, higher than Q3 2023's **13.8%**, primarily due to prior year R&D tax credits - The effective tax rate was **15.4%** in Q3 2024, compared to **13.8%** in Q3 2023[32](index=32&type=chunk) - The 2024 rate was higher mainly because the 2023 rate reflected additional R&D tax credits from prior years[32](index=32&type=chunk) [Use of Non-GAAP Financial Measures](index=10&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company uses non-GAAP measures like business segment operating profit and free cash flow to evaluate performance, providing reconciliations to GAAP counterparts - The company uses non-GAAP measures like 'Business segment operating profit' and 'Free cash flow' for internal performance evaluation and as goals in incentive plans[33](index=33&type=chunk)[34](index=34&type=chunk)[36](index=36&type=chunk) - Business segment operating profit excludes unallocated items like FAS/CAS pension adjustments and intangible asset amortization[34](index=34&type=chunk) - Free cash flow is defined as cash from operations less capital expenditures and is used to evaluate liquidity and cash available for return to stakeholders[36](index=36&type=chunk) [Adjusted Earnings Reconciliation](index=11&type=section&id=Adjusted%20Earnings%20Reconciliation) After adjusting for non-operational mark-to-market investment losses, the adjusted diluted EPS for Q3 2024 was **$6.84**, compared to the reported **$6.80** Q3 2024 GAAP to Non-GAAP EPS Reconciliation | Metric | As Reported (GAAP) | Adjustment (Mark-to-market losses) | As Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Earnings Before Income Taxes | $1,918M | $14M | $1,932M | | Net Earnings | $1,623M | $10M | $1,633M | | Diluted EPS | $6.80 | $0.04 | $6.84 | [Forward-Looking Statements and Risk Factors](index=13&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements and associated risks, including reliance on government contracts, budget uncertainties, and supply chain issues [Key Risk Factors](index=13&type=section&id=Key%20Risk%20Factors) The company identifies several material risks to its future performance, including dependence on U.S. government funding, F-35 program execution, and supply chain issues - Major risks include reliance on U.S. Government contracts, budget uncertainty, and potential government shutdowns[42](index=42&type=chunk) - Risks related to the F-35 program, including development, production, and sustainment, are highlighted[42](index=42&type=chunk) - Other significant risks include performance of key suppliers, inflation, international trade policies, and cyber threats[42](index=42&type=chunk)[43](index=43&type=chunk) [Consolidated Financial Statements and Operating Data](index=15&type=section&id=Consolidated%20Financial%20Statements%20and%20Operating%20Data) This section presents the company's consolidated financial statements, including statements of earnings, balance sheets, cash flows, and key operating data [Consolidated Statement of Earnings](index=15&type=section&id=Consolidated%20Statement%20of%20Earnings) For the nine months ended September 29, 2024, net sales were **$52.4 billion**, and net earnings were **$4.8 billion**, or **$20.05** per diluted share Consolidated Statement of Earnings (Nine Months Ended) | (in millions, except per share data) | Sept. 29, 2024 | Sept. 24, 2023 | | :--- | :--- | :--- | | Net sales | $52,421 | $48,697 | | Gross profit | $6,240 | $6,184 | | Operating profit | $6,317 | $6,214 | | Earnings before income taxes | $5,701 | $5,953 | | Net earnings | $4,809 | $5,054 | | Diluted earnings per share | $20.05 | $19.97 | [Consolidated Balance Sheet](index=18&type=section&id=Consolidated%20Balance%20Sheet) As of September 29, 2024, total assets were **$55.5 billion**, with total liabilities at **$48.3 billion** and stockholders' equity at **$7.2 billion** Consolidated Balance Sheet Summary (in millions) | Metric | Sept. 29, 2024 | Dec. 31, 2023 | | :--- | :--- | :--- | | Total current assets | $23,211 | $20,521 | | Total assets | $55,520 | $52,456 | | Total current liabilities | $17,810 | $16,937 | | Total liabilities | $48,320 | $45,621 | | Total stockholders' equity | $7,200 | $6,835 | [Consolidated Statement of Cash Flows](index=19&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) For the first nine months of 2024, net cash provided by operating activities was **$5.9 billion**, with **$3.3 billion** used for financing activities Cash Flow Summary (Nine Months Ended, in millions) | Metric | Sept. 29, 2024 | Sept. 24, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,949 | $5,555 | | Net cash used for investing activities | ($954) | ($991) | | Net cash used for financing activities | ($3,286) | ($3,560) | | Net change in cash and cash equivalents | $1,709 | $1,004 | | Cash and cash equivalents at end of period | $3,151 | $3,551 | [Other Financial and Operating Information](index=20&type=section&id=Other%20Financial%20and%20Operating%20Information) Total backlog increased to **$165.7 billion** as of September 29, 2024, with **48** F-35 aircraft delivered in Q3 2024 Backlog by Segment (in millions) | Segment | Sept. 29, 2024 | Dec. 31, 2023 | | :--- | :--- | :--- | | Aeronautics | $50,988 | $60,156 | | Missiles and Fire Control | $40,722 | $32,229 | | Rotary and Mission Systems | $37,571 | $37,726 | | Space | $36,412 | $30,456 | | **Total backlog** | **$165,693** | **$160,567** | Aircraft Deliveries | Aircraft | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | F-35 | 48 | 30 | | F-16 | 2 | 1 | | C-130J | 4 | 7 |

Net sales of $17.1 billion, an increase of 1% year over yearNet earnings of $1.6 billion, or $6.80 per shareCash from operations of $2.4 billion and free cash flow of $2.1 billion$1.6 billion of cash returned to shareholders through dividends and share repurchases Increased share repurchase authority by $3.0 billion to a total authorization of $10.3 billionIncreased quarterly dividend 5% to $3.30 per share2024 financial outlook increasedBETHESDA, Md., Oct. 22, 2024 /PRNewswire/ -- Lockheed Martin Corporatio ...