Lockheed Martin Reports Fourth Quarter and Full Year 2019 Results (excerpt)
(Source: Lockheed Martin; issued Jan. 28, 2020)
BETHESDA, Md. --- Lockheed Martin Corporation today reported fourth quarter 2019 net sales of $15.9 billion, compared to $14.4 billion in the fourth quarter of 2018. Net earnings in the fourth quarter of 2019 was $1.5 billion, or $5.29 per share, compared to $1.3 billion, or $4.39 per share, in the fourth quarter of 2018.

Cash from operations in the fourth quarter of 2019 was $1.5 billion, after discretionary pension contributions of $1.0 billion, compared to cash from operations of $2.2 billion in the fourth quarter of 2018.

Net sales in 2019 was $59.8 billion, compared to $53.8 billion in 2018. Net earnings in 2019 was $6.2 billion, or $21.95 per share, compared to $5.0 billion, or $17.59 per share, in 2018. Cash from operations in 2019 was $7.3 billion, after discretionary pension contributions of $1.0 billion, compared to cash from operations of $3.1 billion in 2018, after annual pension contributions of $5.0 billion.

"The corporation delivered outstanding performance throughout 2019, achieving exceptional sales growth, strong earnings, cash from operations, and a record backlog," said Lockheed Martin Chairman, President and CEO Marillyn Hewson. "As we look ahead to 2020, we remain focused on providing innovative global solutions for our customers, investing for growth across our portfolio, and generating long-term value for our shareholders."

Aeronautics

Aeronautics' net sales in the fourth quarter of 2019 increased $500 million, or 9 percent, compared to the same period in 2018. The increase was primarily attributable to higher net sales of approximately $390 million for the F-35 program due to increased volume on sustainment and development contracts; and about $100 million for higher volume on classified programs.

Aeronautics' operating profit in the fourth quarter of 2019 increased $53 million, or 8 percent, compared to the same period in 2018. Operating profit increased approximately $70 million for the F-35 program due to higher volume and risk retirements on sustainment and development contracts and higher risk retirements on production contracts. Adjustments not related to volume, including net profit booking rate adjustments, were comparable in the fourth quarter of 2019 compared to the same period in 2018.

Aeronautics' net sales in 2019 increased $2.5 billion, or 12 percent, compared to 2018. The increase was primarily attributable to higher net sales of approximately $2.0 billion for the F-35 program due to increased volume on production, sustainment and development contracts; and about $350 million for higher volume on classified programs.

Aeronautics' operating profit in 2019 increased $249 million, or 11 percent, compared to 2018. Operating profit increased approximately $210 million for the F-35 program due to increased volume on production, sustainment and development contracts; and about $50 million for the F-16 program due to higher risk retirements on sustainment contracts. These increases were partially offset by a decrease of $20 million on the F-22 program due to lower risk retirements. Adjustments not related to volume, including net profit booking rate adjustments, were $25 million lower in 2019 compared to 2018.

Missiles and Fire Control

MFC's net sales in the fourth quarter of 2019 increased $342 million, or 14 percent, compared to the same period in 2018. The increase was primarily attributable to higher net sales of approximately $250 million for tactical and strike missile programs due to increased volume (primarily precision fires and new hypersonic development programs); about $85 million for integrated air and missile defense programs due to increased volume (primarily Patriot Advanced Capability-3 (PAC-3) and Terminal High Altitude Area Defense (THAAD)); and about $50 million for sensors and global sustainment programs due to higher volume (primarily Special Operations Forces Global Logistics Support Services (SOF GLSS)). These increases were partially offset by a decrease of $35 million as a result of lower volume on energy programs and the divestiture of the Distributed Energy Solutions business in November 2019.

MFC's operating profit in the fourth quarter of 2019 decreased $28 million, or 7 percent, compared to the same period in 2018. Operating profit decreased approximately $25 million for sensors and global sustainment programs due to lower risk retirements (primarily Low Altitude Navigation and Targeting Infrared for Night (LANTIRN) and Sniper Advanced Targeting Pod (SNIPER). Operating profit on tactical and strike missile programs was comparable as higher volume (primarily precision fires) was offset by lower risk retirements (primarily Javelin). Adjustments not related to volume, including net profit booking rate adjustments, were $55 million lower in the fourth quarter of 2019 compared to the same period in 2018.

MFC's net sales in 2019 increased $1.7 billion, or 20 percent, compared to 2018. The increase was primarily attributable to higher net sales of approximately $940 million for tactical and strike missile programs due to increased volume (primarily precision fires, new hypersonic development programs, and classified development programs); about $465 million for integrated air and missile defense programs due to increased volume (primarily PAC-3 and THAAD); and about $300 million for sensors and global sustainment programs due to increased volume (primarily SOF GLSS and Apache).

MFC's operating profit in 2019 increased $193 million, or 15 percent, compared to 2018. Operating profit increased approximately $100 million for integrated air and missile defense programs due to higher volume and higher risk retirements (primarily PAC-3 and THAAD); and about $60 million for tactical and strike missile programs due to higher volume (primarily precision fires), partially offset by lower risk retirements (primarily Hellfire and Javelin). Operating profit on sensors and global sustainment programs was comparable as higher volume (primarily Apache and SOF GLSS) was offset by lower risk retirements (primarily LANTIRN and SNIPER), after a net decrease in charges of $55 million on international military programs. Adjustments not related to volume, including net profit booking rate adjustments, were $30 million lower in 2019 compared to 2018.

Rotary and Mission Systems

RMS' net sales in the fourth quarter of 2019 increased $276 million, or 8 percent, compared to the same period in 2018. The increase was primarily attributable to higher net sales of approximately $160 million for training and logistics (TLS) programs due to higher volume (primarily an army sustainment program); about $110 million for C6ISR (command, control, communications, computers, cyber, combat systems, intelligence, surveillance, and reconnaissance) programs due to higher volume (primarily undersea combat systems programs); and about $45 million for integrated warfare systems and sensors (IWSS) programs due to higher volume (primarily Littoral Combat Ship (LCS) and Aegis). These increases were partially offset by a decrease of approximately $40 million for Sikorsky helicopter programs due to lower volume (primarily mission systems programs).

RMS' operating profit in the fourth quarter of 2019 increased $64 million, or 22 percent, compared to the same period in 2018. Operating profit increased approximately $70 million for Sikorsky helicopter programs due to better cost performance across the portfolio, customer mix, and higher risk retirements; and about $20 million for IWSS primarily due to reserves recorded for performance matters on two programs in the fourth quarter of 2018. These increases were partially offset by a $20 million decrease for C6ISR due to lower risk retirements (primarily undersea combat systems programs). Operating profit on TLS programs was comparable as increased volume was offset by lower risk retirements. Adjustments not related to volume, including net profit booking rate adjustments, were $20 million lower during the fourth quarter of 2019 compared to the same period in 2018.

RMS' net sales in 2019 increased $878 million, or 6 percent, compared to 2018. The increase was primarily attributable to higher net sales of approximately $535 million for IWSS programs due to higher volume (primarily LCS, radar surveillance systems programs, Multi Mission Surface Combatant (MMSC), and Aegis); about $290 million for various TLS programs due to higher volume (primarily an army sustainment program); and about $200 million for various C6ISR programs due to higher volume (primarily undersea combat systems and cyber solutions programs). These increases were partially offset by a decrease of approximately $145 million for Sikorsky helicopter programs due to lower volume (primarily Black Hawk production, mission systems programs, and commercial aircraft).

RMS' operating profit in 2019 increased $119 million, or 9 percent, compared to 2018. Operating profit increased approximately $105 million for Sikorsky helicopter programs primarily due to better cost performance across the portfolio, customer mix, and higher risk retirements; and about $55 million for IWSS programs due to higher volume (primarily radar surveillance systems programs, LCS, and Aegis), after $50 million in charges in the first quarter of 2019 for a ground-based radar program. These increases were partially offset by a decrease of $50 million for TLS programs due to $80 million in charges primarily recorded in the second quarter of 2019 for an army sustainment program partially offset by lower charges on various other programs. Adjustments not related to volume, including net profit booking rate adjustments, were $65 million lower in 2019 compared to 2018. (end of excerpt)


Click here for the full earnings statement, with graphics, on the Lockheed Martin website.

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