Lockheed Martin Revenue Increases 2%; Reaffirms FY23 Forecast

The company reported net sales of $16.9 billion, an increase of 2% year-over-year, and net earnings of $1.7 billion, or $6.73 per share. Cash from operations was reported at $2.9 billion, with free cash flow at $2.5 billion. The company returned $2.5 billion to shareholders through dividends and share repurchases, indicating the company's efforts to reward its shareholders.

The company's backlog remains robust at $156 billion, with both domestic and international orders being strong. 

Aeronautics' net sales in the third quarter of 2023 decreased by $372 million, or 5%, compared to the same period in 2022. The decrease was primarily attributable to lower net sales of $525 million for the F-35 program due to lower volume on production contracts and the recognition in the third quarter 2022 of $325 million of sales deferred from the second quarter of 2022 until additional contractual authorization and funding was received on the Lot 15 contract.

Aeronautics' operating profit in the third quarter of 2023 decreased by $88 million, or 12%, compared to the same period in 2022. The decrease was primarily attributable to lower operating profit of $115 million for the F-35 program due to lower volume and lower favorable profit adjustments on production contracts and the recognition of sales and associated operating profit in the third quarter of 2022 on the Lot 15 contract as described above.

Total net profit booking rate adjustments were $80 million lower in the third quarter of 2023 compared to the same period in 2022. 

Despite these declines, Lockheed Martin remains optimistic about its financial outlook for 2023. The company reaffirmed its expectation for capital expenditures. The company expects to see operating profit of $2.04 billion, a decrease of 5.4% year-over-year. 

Looking to the future, LMT plans to pursue its strategy of building capacity, efficiency, and resilience into its production operations, driving advanced digital technologies, and expanding its international business and operations. The company's strategy is designed to drive growth in its traditional platforms and systems, augmented with digital service revenues over time, which in turn will support the company's dynamic capital allocation process to reward shareholders.

In addition, Lockheed Martin announced that it has increased its share repurchase authority by $6.0 billion to a total authorization of $13.0 billion. The company also increased its quarterly dividend to $3.15 per share. 

Overall, Lockheed Martin's third quarter results were at or above expectations across the board, generating $2.5 billion of free cash flow, with nearly 100% returned to shareholders through dividends and share repurchases. The company's backlog remains strong, and its 21st Century Security strategy is resulting in new business successes. While there were declines in net sales and operating profit for the Aeronautics division, Lockheed Martin remains optimistic about its financial outlook for 2023.

$LMT(LMT)