Lockheed Martin Corp. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Lockheed Martin Corp. filed its quarterly 10-Q report detailing financial performance and segment data for the period ending March 31, 2024.</b>

AI Summary

LOCKHEED MARTIN CORP (LMT) filed a Quarterly Report (10-Q) with the SEC on April 23, 2024. Lockheed Martin Corp. filed its 10-Q report for the quarterly period ended March 31, 2024. The filing covers the period from January 1, 2024, to March 31, 2024. Key financial statement data points such as common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income are detailed for various periods. Segment information for Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space is provided for the periods ended March 31, 2024, and March 26, 2023. The report includes reconciliations of operating segments to total net sales.

Why It Matters

For investors and stakeholders tracking LOCKHEED MARTIN CORP, this filing contains several important signals. This 10-Q filing provides crucial insights into Lockheed Martin's financial health and operational performance during the first quarter of 2024, enabling investors to assess trends and make informed decisions. The detailed segment reporting allows stakeholders to understand the revenue contributions and performance of each major business unit, such as Aeronautics and Space, which is vital for evaluating the company's strategic focus and growth drivers.

Risk Assessment

Risk Level: medium — LOCKHEED MARTIN CORP shows moderate risk based on this filing. The company operates in the defense industry, which is subject to significant government spending fluctuations and geopolitical risks, as evidenced by the nature of its products and services (guided missiles & space vehicles).

Analyst Insight

Investors should closely monitor the revenue trends across Lockheed Martin's different segments, particularly Aeronautics and Space, to gauge the impact of defense spending and contract awards.

Revenue Breakdown

Key Numbers

• 2024-03-31 — Period End Date (Quarterly report period)
• 2024-01-01 — Period Start Date (Quarterly report period)
• 2023-03-26 — Prior Year Period End Date (Comparative period in prior year)
• 2023-01-01 — Prior Year Period Start Date (Comparative period in prior year)

Key Players & Entities

• LOCKHEED MARTIN CORP (company) — Filer name
• LMT (company) — Ticker symbol
• 2024-03-31 (date) — Period of report
• 2024-04-23 (date) — Filing date
• BETHESDA (location) — Business address city
• MD (location) — Business address state

FAQ

Risk Factors

• Government Contracts and Funding [high — market]: The company's performance is heavily dependent on government appropriations and contract awards, which can be subject to changes in defense budgets and political priorities.
• Export Controls and International Regulations [medium — regulatory]: As a global defense contractor, Lockheed Martin is subject to complex export control laws and international regulations that can impact its ability to conduct business internationally.
• Supply Chain and Manufacturing [medium — operational]: Disruptions in the supply chain or manufacturing processes, including those related to specialized components, could adversely affect production schedules and delivery commitments.

Key Financial Figures

• $1 — ange on which registered Common Stock, $1 par value LMT New York Stock Exchange

Filing Documents

• lmt-20240331.htm (10-Q) — 1183KB
• ex101q12024.htm (EX-10.1) — 157KB
• ex102q12024.htm (EX-10.2) — 256KB
• ex103q12024.htm (EX-10.3) — 246KB
• ex15q12024.htm (EX-15) — 5KB
• ex311q12024.htm (EX-31.1) — 12KB
• ex312q12024.htm (EX-31.2) — 10KB
• ex32q12024.htm (EX-32) — 5KB
• image_0a.jpg (GRAPHIC) — 143KB
• image_0b.jpg (GRAPHIC) — 3KB
• 0000936468-24-000052.txt (&nbsp;) — 7042KB
• lmt-20240331.xsd (EX-101.SCH) — 37KB
• lmt-20240331_cal.xml (EX-101.CAL) — 53KB
• lmt-20240331_def.xml (EX-101.DEF) — 178KB
• lmt-20240331_lab.xml (EX-101.LAB) — 477KB
• lmt-20240331_pre.xml (EX-101.PRE) — 322KB
• lmt-20240331_htm.xml (XML) — 1014KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

ITEM 1. Financial Statements (Unaudited) Consolidated Statements of Earnings for the Quarters Ended March 31, 2024 and March 26, 2023 3 Consolidated Statements of Comprehensive Income for the Quarters Ended March 31, 2024 and March 26, 2023 4 Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 5 Consolidated Statements of Cash Flows for the Quarters Ended March 31, 2024 and March 26, 2023 6 Consolidated Statements of Equity for the Quarters Ended March 31, 2024 and March 26, 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Report of Independent Registered Public Accounting Firm 24

Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 25

Quantitative and Qualitative Disclosures About Market Risk

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 39

Controls and Procedures

ITEM 4. Controls and Procedures 39

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

ITEM 1. Legal Proceedings 40

Risk Factors

ITEM 1A. Risk Factors 41

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 41

Other Information

ITEM 5. Other Information 42

Exhibits

ITEM 6. Exhibits 42 SIGNATURE 43 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements

ITEM 1. Financial Statements Lockheed Martin Corporation Consolidated Statements of Earnings (unaudited; in millions, except per share data) Quarters Ended March 31, 2024 March 26, 2023 Net sales Products $ 14,196 $ 12,526 Services 2,999 2,600 Total net sales 17,195 15,126 Cost of sales Products ( 12,884 ) ( 11,151 ) Services ( 2,603 ) ( 2,284 ) Other unallocated, net 285 355 Total cost of sales ( 15,202 ) ( 13,080 ) Gross profit 1,993 2,046 Other income (expense), net 36 ( 9 ) Operating profit 2,029 2,037 Interest expense ( 255 ) ( 202 ) Non-service FAS pension income 16 110 Other non-operating income, net 45 49 Earnings before income taxes 1,835 1,994 Income tax expense ( 290 ) ( 305 ) Net earnings $ 1,545 $ 1,689 Earnings per common share Basic $ 6.42 $ 6.63 Diluted $ 6.39 $ 6.61 Cash dividends paid per common share $ 3.15 $ 3.00 The accompanying notes are an integral part of these unaudited consolidated financial statements. 3 Table of Contents Lockheed Martin Corporation Consolidated Statements of Comprehensive Income (unaudited; in millions) Quarters Ended March 31, 2024 March 26, 2023 Net earnings $ 1,545 $ 1,689 Other comprehensive income, net of tax Postretirement benefit plans Amortization of actuarial losses and prior service credits, net of tax of $ 5 million in 2024 and $ 10 million in 2023 19 ( 37 ) Other, net, net of tax of $ 0 million in 2024 and $ 4 million in 2023 ( 27 ) ( 26 ) Other comprehensive (loss), net of tax ( 8 ) ( 63 ) Comprehensive income $ 1,537 $ 1,626 The accompanying notes are an integral part of these unaudited consolidated financial statements. 4 Table of Contents Lockheed Martin Corporation Consolidated Balance Sheets (in millions, except par value) March 31, 2024 December 31, 2023 (unaudited) Assets Current assets Cash and cash equivalents $ 2,790 $ 1,442 Receivables, net 2,257 2,132 Contract assets 14,050 13,183 Inventories 3,278 3,132 Other current asse

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) NOTE 1 - BASIS OF PRESENTATION We prepared these consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information, the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission (SEC) Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these consolidated financial statements reflect all adjustments that are of a normal recurring nature necessary for a fair presentation of our results of operations, financial condition, and cash flows for the interim periods presented. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from these estimates. Significant estimates inherent in the preparation of our consolidated financial statements include, but are not limited to, accounting for sales and cost recognition; postretirement benefit plans; environmental liabilities and assets for the portion of environmental costs that are probable of future recovery; evaluation of goodwill, intangible assets, investments and other assets for impairment; income taxes including deferred tax assets; fair value measurements; and contingencies. The consolidated financial statements include the accounts of subsidiaries we control and variable interest entities if we are the primary beneficiary. We eliminate intercompany balances and transactions i

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) NOTE 3 - INFORMATION ON BUSINESS SEGMENTS Overview We operate in four business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. We organize our business segments based on the nature of products and services offered.

Selected Financial Data by Business Segment

Selected Financial Data by Business Segment 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 thus are 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. Summary operating results for each of our business segments were as follows (in millions): Quarters Ended March 31, 2024 March 26, 2023 Net sales Aeronautics $ 6,845 $ 6,269 Missiles and Fire Control 2,993 2,388 Rotary and Mission Systems 4,088 3,510 Space 3,269 2,959 Total net sales $ 17,195 $ 15,126 Operating profit Aeronautics $ 679 $ 675 Missiles and Fire Control 311 377 Rotary and Mission Systems 430 350 Space 325 280 Total business segment operating profit 1,745 1,682 Unallocated items FAS/CAS pension operating adjustment 406 415 Intangible asset amortization expense ( 61 ) ( 62 ) Other, net ( 61 ) 2 Total unallocated items 284 355 Total consolidated operating profit $ 2,029 $ 2,037 Intersegment sales Aeronautics $ 70 $ 53 Missiles and Fire Control 202 146 Rotary and Mission Systems 586 489 Space 107 86 Total intersegment sales $ 965 $ 774 Unallocated Items 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, stock-based compensation expense, changes in the fair value of assets and liabilities for

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) losses from divestitures, intangible asset amortization expense, 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. See "Note 10 - Other" for a discussion related to certain factors that may impact the comparability of net sales and operating profit of our business segments. FAS/CAS Pension Operating Adjustment Our business segments' results of operations include pension expense only as calculated under U.S. Government Cost Accounting Standards (CAS), which we refer to as CAS pension cost. We recover CAS pension and other postretirement benefit plan cost through the pricing of our products and services on U.S. Government contracts and, therefore, recognize CAS pension cost in each of our business segment's net sales and cost of sales. Our consolidated financial statements must present pension and other postretirement benefit plan income calculated in accordance with Financial Accounting Standards (FAS) requirements under U.S. GAAP. The operating portion of the total FAS/CAS pension adjustment represents the difference between the service cost component of FAS pension income (expense) and total CAS pension cost. The non-service FAS pension income (expense) components are included in non-service FAS pension income (expense) in our consolidated statements of earnings. As a result, to the extent that CAS pension cost exceeds the service cost component of FAS pension income (expense) we have a favorable FAS/CAS pension operating adjustment. 10 Table of Contents Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Disaggregation of Net Sales Net sales by products and services, contract type, customer, and geographic region were as follows (in millions): Quarters Ended March 31, 2024 Aeronautics MFC RMS Space Total Net sales Products $ 5,592 $ 2,664 $ 3,241 $ 2,699 $ 14,196 Services 1,253 329 847 570 2,999 Total net sales $ 6,845 $ 2,993 $ 4,088 $ 3,269 $ 17,195 Net sales by contract type Fixed-price $ 4,584 $ 1,996 $ 2,477 $ 900 $ 9,957 Cost-reimbursable 2,261 997 1,611 2,369 7,238 Total net sales $ 6,845 $ 2,993 $ 4,088 $ 3,269 $ 17,195 Net sales by customer U.S. Government $ 4,666 $ 2,167 $ 2,840 $ 3,162 $ 12,835 International (a) 2,152 824 1,162 68 4,206 U.S. commercial and other 27 2 86 39 154 Total net sales $ 6,845 $ 2,993 $ 4,088 $ 3,269 $ 17,195 Net sales by geographic region United States $ 4,693 $ 2,169 $ 2,926 $ 3,201 $ 12,989 Europe 1,211 245 269 18 1,743 Asia Pacific 636 187 540 46 1,409 Middle East 203 370 162 4 739 Other 102 22 191 — 315 Total net sales $ 6,845 $ 2,993 $ 4,088 $ 3,269 $ 17,195 Quarter Ended March 26, 2023 Aeronautics MFC RMS Space Total Net sales Products $ 5,156 $ 2,089 $ 2,792 $ 2,489 $ 12,526 Services 1,113 299 718 470 2,600 Total net sales $ 6,269 $ 2,388 $ 3,510 $ 2,959 $ 15,126 Net sales by contract type Fixed-price $ 4,312 $ 1,618 $ 2,208 $ 764 $ 8,902 Cost-reimbursable 1,957 770 1,302 2,195 6,224 Total net sales $ 6,269 $ 2,388 $ 3,510 $ 2,959 $ 15,126 Net sales by customer U.S. Government $ 4,117 $ 1,581 $ 2,423 $ 2,908 $ 11,029 International (a) 2,114 805 1,020 45 3,984 U.S. commercial and other 38 2 67 6 113 Total net sales $ 6,269 $ 2,388 $ 3,510 $ 2,959 $ 15,126 Net sales by geographic region United States $ 4,155 $ 1,583 $ 2,490 $ 2,914 $ 11,142 Europe 1,130 211 225 23 1,589 Asia Pacific 675 102 438 22 1,237 Middle East 225 455 186 — 866 Other 84 37 171 — 292 Total net sales $ 6,269 $ 2,388 $ 3,510 $ 2,959 $ 15,12

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Our Aeronautics business segment includes our largest program, the F-35 Lightning II, an international multi-role, multi-variant, stealth fighter aircraft. Net sales for the F-35 program represented approximately 25 % of our total consolidated net sales for the quarter ended March 31, 2024 and 26 % of our total consolidated net sales for the quarter ended March 26, 2023. Assets Total assets for each of our business segments were as follows (in millions): March 31, 2024 December 31, 2023 Assets Aeronautics $ 13,695 $ 13,167 Missiles and Fire Control 5,786 5,703 Rotary and Mission Systems 17,454 17,521 Space 6,862 6,560 Total business segment assets 43,797 42,951 Corporate assets (a) 11,166 9,505 Total assets $ 54,963 $ 52,456 (a) Corporate assets primarily include cash and cash equivalents, deferred income taxes, assets for the portion of environmental costs that are probable of future recovery, property, plant and equipment used in our corporate operations, assets held in a trust for deferred compensation plans, and investments in early-stage companies. NOTE 4 - CONTRACT ASSETS AND LIABILITIES Contract assets include unbilled amounts typically resulting from sales under contracts when the percentage-of-completion cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract liabilities include advance payments and billings in excess of revenue recognized. Contract assets and contract liabilities were as follows (in millions): March 31, 2024 December 31, 2023 Contract assets $ 14,050 $ 13,183 Contract liabilities 8,745 9,190 Contract assets increased $ 867 million during the quarter ended March 31, 2024, due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the quarter ended March 31, 2024 for which we have not yet billed our customers. There wer

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) NOTE 5 - INVENTORIES Inventories consisted of the following (in millions): March 31, 2024 December 31, 2023 Materials, spares and supplies $ 640 $ 606 Work-in-process 2,443 2,338 Finished goods 195 188 Total inventories $ 3,278 $ 3,132 Costs incurred to fulfill a contract in advance of the contract being awarded are included in inventories as work-in-process if we determine that those costs relate directly to a contract or to an anticipated contract that we can specifically identify and determine that contract award is probable, the costs generate or enhance resources that will be used in satisfying performance obligations, and the costs are recoverable (referred to as pre-contract costs). These advanced procurement costs are generally incurred in order to enhance our ability to achieve schedule and certain customer milestones. Pre-contract costs that are initially capitalized in inventory are generally recognized as cost of sales consistent with the transfer of products and services to the customer upon the receipt of the anticipated contract. All other pre-contract costs, including start-up costs, are expensed as incurred. As of March 31, 2024 and December 31, 2023, $ 1.1 billion and $ 989 million of pre-contract costs (primarily the F-35 program and classified contracts at our Aeronautics business segment) were included in inventories. 13 Table of Contents Lockheed Martin Corporation

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) NOTE 6 - POSTRETIREMENT BENEFIT PLANS FAS income The pretax FAS income related to our qualified defined benefit pension plans and retiree medical and life insurance plans consisted of the following (in millions): Quarters Ended March 31, 2024 March 26, 2023 Qualified defined benefit pension plans Operating: Service cost $ ( 15 ) $ ( 16 ) Non-operating: Interest cost ( 349 ) ( 365 ) Expected return on plan assets 393 430 Amortization of actuarial losses ( 65 ) ( 42 ) Amortization of prior service credits 37 87 Non-service FAS pension income 16 110 Total FAS pension income $ 1 $ 94 Retiree medical and life insurance plans Operating: Service cost $ ( 1 ) $ ( 1 ) Non-operating: Interest cost ( 16 ) ( 17 ) Expected return on plan assets 27 26 Amortization of actuarial gains 9 8 Amortization of prior service costs ( 1 ) ( 3 ) Non-service FAS retiree medical and life income 19 14 Total FAS retiree medical and life income $ 18 $ 13 We record the service cost component of FAS income for our qualified defined benefit pension plans and retiree medical and life insurance plans in the cost of sales accounts; the non-service components of our FAS income for our qualified defined benefit pension plans in the non-service FAS pension income account; and the non-service components of our FAS income for our retiree medical and life insurance plans as part of the other non-operating income, net account on our consolidated statements of earnings. The amortization of net actuarial losses or gains and prior service credits or costs in the table above, along with similar costs related to our other postretirement benefit plans ($ 4 million for the quarter ended March 31, 2024 and $ 3 million for the quarter ended March 26, 2023) were reclassified from accumulated other comprehensive loss (AOCL) and recorded as a component of FAS income for the periods presented. These costs totaled $ 24 million

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) NOTE 7 - LEGAL PROCEEDINGS AND CONTINGENCIES

Legal Proceedings

Legal Proceedings We are a party to litigation and other proceedings that arise in the ordinary course of our business, including matters arising under provisions relating to the protection of the environment, and are subject to contingencies related to certain businesses we previously owned. These types of matters could result in fines, penalties, cost reimbursements or contributions, compensatory or treble damages or non-monetary sanctions or relief. We believe the probability is remote that the outcome of each of these matters, including the legal proceedings described below, will have a material adverse effect on the company as a whole, notwithstanding that the unfavorable resolution of any matter may have a material effect on our net earnings and cash flows in any particular interim reporting period. Among the factors that we consider in this assessment are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if estimable), the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar cases and the experience of other companies, the facts available to us at the time of assessment and how we intend to respond to the proceeding or claim. Our assessment of these factors may change over time as individual proceedings or claims progress. Although we cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may have been incurred, GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made. We follow a thorough process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do we conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in our discussion of legal p

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