Yahoo Finance 
Yahoo Finance Plus Lockheed Martin Reports Third Quarter 2022 Financial Results
Net sales of $16.6 billion and net earnings of $1.8 billion, or $6.71 per share
Cash from operations of $3.1 billion and free cash flow of $2.7 billion
Returned $2.1 billion of cash to shareholders through share repurchases and dividends
Increased share repurchase authority by $14.0 billion
Increased quarterly dividend rate 7% to $3.00 per share
Increased backlog to $140 billion
Reaffirms 2022 financial outlook
BETHESDA, Md., Oct. 18, 2022 /PRNewswire/ -- Lockheed Martin Corporation [NYSE: LMT] today reported third quarter 2022 net sales of $16.6 billion, compared to $16.0 billion in the third quarter of 2021. Net earnings in the third quarter of 2022 were $1.8 billion, or $6.71 per share, compared to $614 million, or $2.21 per share, in the third quarter of 2021. Cash from operations was $3.1 billion in the third quarter of 2022, compared to $1.9 billion in the third quarter of 2021. Free cash flow was $2.7 billion in the third quarter of 2022, compared to $1.6 billion in the third quarter of 2021.
"Lockheed Martin delivered a solid quarter, highlighted by strength in free cash flow, orders, and operating margins, that positions us well to achieve our full-year commitments," said Lockheed Martin Chairman, President and CEO James Taiclet. "Our continuing ability to deliver strong financial performance in turn enables further investments in the 21st Century Security technologies essential to support our customers in conducting effective Joint All-Domain Operations. These technologies include hypersonics, directed energy, and autonomy, as well as cutting edge digital capabilities in our evolving 5G.MIL® open standards-based architecture. In addition, we are investing in production and sustainment capacity for the solutions needed now to defend our allies and our nation, including F-35, Javelin and HIMARS. Moreover, we today announced an additional $14 billion in share repurchase authority to go with our recently increased, industry-leading dividend for the benefit of our investors."
Adjusted earnings before income taxes, net earnings and diluted EPS
The table below shows the impact to earnings before income taxes, net earnings and diluted earnings per share (EPS) for certain non-operational items:
(in millions, except per share data) | Quarters Ended | |||||||||
Sept. 25, 2022 | Sept. 26, 2021 | |||||||||
Earnings | Net | Diluted | Earnings | Net | Diluted | |||||
As Reported (GAAP) | $ 2,099 | $ 1,778 | $ 6.71 | $ 679 | $ 614 | $ 2.21 | ||||
Pension settlement charge | — | — | — | 1,665 | 1,309 | 4.72 | ||||
Lockheed Martin Ventures investment losses (gains) | 26 | 20 | 0.07 | (98) | (74) | (0.27) | ||||
Losses (gains) on assets and liabilities | 33 | 25 | 0.09 | (21) | (16) | (0.06) | ||||
Total Adjustments | 59 | 45 | 0.16 | 1,546 | 1,219 | 4.39 | ||||
As Adjusted (Non-GAAP)1 | $ 2,158 | $ 1,823 | $ 6.87 | $ 2,225 | $ 1,833 | $ 6.60 | ||||
1 | See the "Use of Non-GAAP Financial Measures" section of this news release for more information. | |||||||||
Summary Financial Results
The following table presents the company's summary financial results.
(in millions, except per share data) | Quarters Ended1 | Nine Months Ended1 | ||||||||
Sept. 25, 2022 | Sept. 26, 2021 | Sept. 25, 2022 | Sept. 26, 2021 | |||||||
Net sales | $ 16,583 | $ 16,028 | $ 46,993 | $ 49,315 | ||||||
Business segment operating profit2 | $ 1,856 | $ 1,850 | $ 5,213 | $ 5,365 | ||||||
Unallocated items | ||||||||||
FAS/CAS operating adjustment | 430 | 491 | 1,281 | 1,469 | ||||||
Severance and restructuring charges | — | — | — | (36) | ||||||
Other, net3 | (127) | (47) | (439) | (130) | ||||||
Total unallocated items | 303 | 444 | 842 | 1,303 | ||||||
Consolidated operating profit | $ 2,159 | $ 2,294 | $ 6,055 | $ 6,668 | ||||||
Net earnings4,5 | $ 1,778 | $ 614 | $ 3,820 | $ 4,266 | ||||||
Diluted earnings per share4,5 | $ 6.71 | $ 2.21 | $ 14.31 | $ 15.32 | ||||||
Cash from operations6 | $ 3,133 | $ 1,937 | $ 5,874 | $ 4,953 | ||||||
Capital expenditures | (405) | (316) | (977) | (915) | ||||||
Free cash flow2,6 | $ 2,728 | $ 1,621 | $ 4,897 | $ 4,038 | ||||||
1 | The company closes its books and records on the last Sunday of the calendar quarter to align its financial closing with its business | |||||||||
2 | Business segment operating profit and free cash flow are non-GAAP measures. See the "Use of Non-GAAP Financial Measures" | |||||||||
3 | Other, net for the quarters ended Sept. 25, 2022 and Sept. 26, 2021 include net losses of $33 million ($25 million, or $0.09 per | |||||||||
4 | Net earnings for the quarters ended Sept. 25, 2022 and Sept. 26, 2021 include net losses of $26 million ($20 million, | |||||||||
5 | Net earnings for the quarter ended Sept. 26, 2021 include a noncash, non-operating pension settlement charge of $1.7 billion | |||||||||
6 | See the "Cash Flows and Capital Deployment Activities" section of this news release for more information. | |||||||||
2022 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 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 2022 Outlook1 | |||
Net sales | ~$65,250 | |||
Business segment operating profit2 | ~$7,175 | |||
Total FAS/CAS pension adjustment3 | ~$740 | |||
Add: pension settlement charge3 | $1,470 | |||
Net FAS/CAS pension adjustment - adjusted2,3 | ~$2,210 | |||
Diluted earnings per share | ~$21.55 | |||
Cash from operations | ≥$7,900 | |||
Capital expenditures | ~$(1,900) | |||
Free cash flow2 | ≥$6,000 | |||
1 | The company's current 2022 financial outlook does not include any future gains or losses related to changes in valuations of the company's | |||
2 | Business segment operating profit, net FAS/CAS pension adjustment - adjusted and free cash flow are non-GAAP measures. See the | |||
3 | The net FAS/CAS pension adjustment - adjusted is presented as a single amount and includes total expected U.S. Government cost | |||
Cash Flows and Capital Deployment Activities
Cash from operations in the quarter ended Sept. 25, 2022 was $3.1 billion. Capital expenditures were $405 million, resulting in free cash flow of $2.7 billion. The increase in operating and free cash flows from the third quarter of 2021 was primarily due to timing of production and billing cycles (primarily the F-35 program) impacting contract assets, the collection of receivables (primarily F-35) and deferral of cash payments for accounts payable (primarily Aeronautics).
The company's capital deployment activities in the quarter ended Sept. 25, 2022 included the following:
paying cash dividends of $739 million; and
repurchasing 3.4 million shares for $1.4 billion, of which $112 million was paid in the fourth quarter of 2022 upon settlement of certain repurchased shares.
Multi-Year $14 Billion Share Repurchase Program and Dividend Rate Increase
On October 17, 2022, the company's board authorized the purchase of up to an additional $14.0 billion of Lockheed Martin common stock under its share repurchase program. This multi-year share repurchase program follows the substantial completion of purchases of common stock under the prior repurchase authorization. The company anticipates executing a $4.0 billion accelerated share repurchase program in the fourth quarter of 2022 bringing our total share repurchases for the year to approximately $8.0 billion. The remainder of the repurchase program authorization is expected to be utilized over a three-year period. The company expects to fund the repurchases through a combination of cash on hand and the issuance of debt. The stock repurchase program does not have an expiration date and may be amended or terminated by the board of directors at any time. The amount of shares ultimately purchased and the timing of purchases are at the discretion of management and subject to compliance with applicable law and regulation.
On Sept. 30, 2022, the company increased its quarterly dividend by $0.20 per share, to $3.00 per share, beginning with the dividend payment in the fourth quarter of 2022.
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 | Nine Months Ended | ||||||||
Sept. 25, 2022 | Sept. 26, 2021 | Sept. 25, 2022 | Sept. 26, 2021 | |||||||
Net sales | ||||||||||
Aeronautics | $ 7,089 | $ 6,568 | $ 19,352 | $ 19,621 | ||||||
Missiles and Fire Control | 2,831 | 2,781 | 8,030 | 8,474 | ||||||
Rotary and Mission Systems | 3,781 | 3,980 | 11,345 | 12,329 | ||||||
Space | 2,882 | 2,699 | 8,266 | 8,891 | ||||||
Total net sales | $ 16,583 | $ 16,028 | $ 46,993 | $ 49,315 | ||||||
Operating profit | ||||||||||
Aeronautics | $ 759 | $ 714 | $ 2,050 | $ 1,979 | ||||||
Missiles and Fire Control | 382 | 413 | 1,184 | 1,210 | ||||||
Rotary and Mission Systems | 414 | 459 | 1,165 | 1,350 | ||||||
Space | 301 | 264 | 814 | 826 | ||||||
Total business segment operating profit | 1,856 | 1,850 | 5,213 | 5,365 | ||||||
Unallocated items | ||||||||||
FAS/CAS operating adjustment | 430 | 491 | 1,281 | 1,469 | ||||||
Severance and restructuring charges | — | — | — | (36) | ||||||
Other, net | (127) | (47) | (439) | (130) | ||||||
Total unallocated items | 303 | 444 | 842 | 1,303 | ||||||
Total consolidated operating profit | $ 2,159 | $ 2,294 | $ 6,055 | $ 6,668 | ||||||
Net sales and operating profit of our business segments exclude intersegment sales, cost of sales, and profit as these activities are eliminated in consolidation and not included in management's evaluation of performance of each segment. Business segment operating profit includes our share of earnings or losses from equity method investees as the operating activities of the equity method investees are closely aligned with the operations of our business segments.
Business segment operating profit excludes the FAS/CAS pension operating adjustment, a portion of corporate costs not considered allowable or allocable to contracts with the U.S. Government under the applicable U.S. Government cost accounting standards (CAS) or federal acquisition regulations (FAR), and other items not considered part of management's evaluation of segment operating performance such as a portion of management and administration costs, legal fees and settlements, environmental costs, stock-based compensation expense, retiree benefits, significant severance actions, significant asset impairments, gains or losses from divestitures, and other miscellaneous corporate activities. Excluded items are included in the reconciling item "Unallocated items" between operating profit from our business segments and our consolidated operating profit.
Changes in net sales and operating profit generally are expressed in terms of volume. Changes in volume refer to increases or decreases in sales or operating profit resulting from varying production activity levels, deliveries or service levels on individual contracts. Volume changes in segment opera...
