Lockheed Martin(US:LMT)2024-04-23 20:15Sales and Revenue - Net sales for Q1 2024 were $17.195 billion, with 75% from the U.S. Government, 24% from international customers, and 1% from U.S. commercial and other customers[111] - Product sales increased by $1.7 billion (13%) in Q1 2024 compared to Q1 2023, driven by higher sales in Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), Aeronautics, and Space segments[124] - Service sales increased by $399 million (15%) in Q1 2024 compared to Q1 2023, primarily due to higher volume in Aeronautics, RMS, and Space segments[125] - Total net sales for Q1 2024 were $17.195 billion, up from $15.126 billion in Q1 2023, with Aeronautics leading at $6.845 billion, followed by Rotary and Mission Systems at $4.088 billion[143] - Aeronautics' net sales increased by $576 million (9%) to $6.845 billion in Q1 2024, driven by higher sales in the F-35, classified programs, and F-16 programs[156] - MFC's net sales increased by $605 million (25%) to $2.993 billion in Q1 2024, primarily due to higher sales in tactical and strike missile programs and integrated air and missile defense programs[160] - RMS' net sales increased by $578 million (16%) to $4.088 billion in Q1 2024, driven by higher sales in IWSS, C6ISR, and Sikorsky helicopter programs[163] - Space's net sales increased by $310 million (10%) to $3.269 billion in Q1 2024, primarily due to higher sales in strategic and missile defense programs and national security space programs[166] Costs and Expenses - Cost of sales for products increased by $1.7 billion (16%) in Q1 2024 compared to Q1 2023, mainly due to higher volume and production ramp-up in MFC, Aeronautics, RMS, and Space segments[128] - Interest expense increased to $255 million in Q1 2024 from $202 million in Q1 2023, primarily due to the issuance of senior unsecured notes in January 2024 and May 2023[132] - Non-service FAS pension income decreased to $16 million in Q1 2024 from $110 million in Q1 2023, primarily due to lower prior service credit amortization and a reduced asset base[133] - The effective income tax rate was 15.8% in Q1 2024, up from 15.3% in Q1 2023, benefiting from R&D tax credits and foreign-derived intangible income deductions[135] - The Tax Cuts and Jobs Act of 2017 is expected to increase the company's 2024 cash tax liability by approximately $350 million due to the amortization of R&D expenditures over five years[137] - Net cash used for investing activities increased by $113 million in Q1 2024 compared to Q1 2023, with capital expenditures totaling $378 million in Q1 2024 and $294 million in Q1 2023[182] Profit and Earnings - Net earnings for Q1 2024 were $1.5 billion ($6.39 per share), down from $1.7 billion ($6.61 per share) in Q1 2023, with EPS benefiting from a 14.1 million reduction in weighted average common shares outstanding[140] - Total business segment operating profit for Q1 2024 was $1.745 billion, slightly up from $1.682 billion in Q1 2023, with Aeronautics contributing $679 million[143] - The company's consolidated operating profit for Q1 2024 was $2.029 billion, slightly down from $2.037 billion in Q1 2023, with unallocated items totaling $284 million[143] - Favorable profit booking rate adjustments increased segment operating profit by $195 million in Q1 2024, compared to $415 million in Q1 2023, with a $100 million reach-forward loss recognized on a classified program at MFC[153] - Aeronautics' operating profit remained stable at $679 million in Q1 2024, with a $50 million increase in the F-16 program offset by a $30 million decrease in the F-35 program[158] - MFC's operating profit decreased by $66 million (18%) to $311 million in Q1 2024, primarily due to a $100 million reach-forward loss on a classified program and unfavorable profit adjustments on HELLFIRE[161] - RMS' operating profit increased by $80 million (23%) to $430 million in Q1 2024, driven by higher profit in IWSS and Sikorsky helicopter programs[164] - Space's operating profit increased by $45 million (16%) to $325 million in Q1 2024, primarily due to higher equity earnings from ULA and increased profit in strategic and missile defense programs[167] Defense Budget and Orders - The U.S. Government's FY 2024 defense budget includes $886 billion for National Defense, with $842 billion allocated to the Department of Defense (DoD) base budget[112] - The FY 2025 budget request includes $895 billion for National Defense, with $850 billion for the DoD base budget, aligning with the Fiscal Responsibility Act (FRA) limits[113] - The company anticipates additional orders over the next several years due to the global threat environment, particularly for munitions replenishment and production ramp-up[117] - The Republic of Korea signed a follow-on LOA for 20 additional F-35s, increasing its program of record from 40 to 60[185] - The Czech Republic signed a LOA to procure 24 F-35s, and the U.S. Department of State approved a potential FMS to Greece for up to 40 F-35s[185] - Singapore announced its intent to purchase eight F-35As to complement the 12 F-35Bs previously committed[185] Supply Chain and Market Risks - Supply chain challenges, including supplier shortages and performance issues, have delayed customer deliveries and increased costs, impacting margins on certain programs[118] - The company's exposures to market risk, including foreign currency exchange rates, have not changed materially since December 31, 2023[190] Cash Flow and Financing - The company had $2.8 billion in cash and cash equivalents as of March 31, 2024, with no borrowings under its $3.0 billion revolving credit facility[169] - Free cash flow for Q1 2024 was $1.257 billion, slightly lower than the $1.270 billion in Q1 2023, with capital expenditures of $378 million[181] - Net cash provided by financing activities increased by $1.5 billion in Q1 2024 compared to Q1 2023, with $780 million paid in dividends and $1.0 billion used for share repurchases[183] - The company received $2.0 billion in net proceeds from the issuance of senior unsecured notes in Q1 2024[183] F-35 Program - The F-35 program backlog as of March 31, 2024, was 373 aircraft, with a production rate of approximately 156 aircraft per year[186] - The company has delivered 992 production F-35 aircraft since program inception, including 710 F-35A, 197 F-35B, and 85 F-35C variants[186] - Deliveries of F-35 aircraft with TR-3 capability are on hold, with customer acceptance targeted for Q2 2024 and deliveries expected to begin in Q3 2024[186] Other Income and Expenses - Other income (expense), net, was $36 million in Q1 2024 compared to a net expense of $9 million in Q1 2023, driven by higher earnings from equity method investments, particularly in ULA[131] - Other non-operating income, net was $45 million in Q1 2024, compared to $49 million in Q1 2023, primarily related to changes in the fair value of early-stage company investments[134] - The FAS/CAS pension operating adjustment was $406 million in Q1 2024, compared to $415 million in Q1 2023, reflecting the difference between FAS pension income and CAS pension cost[143][146]