Lockheed Martin Files Q3 2024 10-Q

TL;DR

LMT Q3 10-Q filed. Financials updated.

AI Summary

Lockheed Martin Corp. filed its 10-Q for the period ending September 29, 2024. The filing details financial performance and operational updates for the third quarter of 2024. Specific financial figures and segment performance are provided, reflecting the company's ongoing business activities in the aerospace and defense sector.

Why It Matters

This filing provides investors and analysts with the latest financial snapshot of Lockheed Martin, a major defense contractor, impacting assessments of its stability and future prospects.

Risk Assessment

Risk Level: low — This is a routine quarterly filing providing standard financial disclosures.

Key Players & Entities

• LOCKHEED MARTIN CORP (company) — Filer
• 20240929 (date) — Period of Report
• 20241022 (date) — Filing Date

FAQ

Key Financial Figures

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

Filing Documents

• lmt-20240929.htm (10-Q) — 1660KB
• ex15q32024.htm (EX-15) — 5KB
• ex311q32024.htm (EX-31.1) — 12KB
• ex312q32024.htm (EX-31.2) — 10KB
• ex32q32024.htm (EX-32) — 5KB
• 0000936468-24-000110.txt ( ) — 7749KB
• lmt-20240929.xsd (EX-101.SCH) — 42KB
• lmt-20240929_cal.xml (EX-101.CAL) — 55KB
• lmt-20240929_def.xml (EX-101.DEF) — 202KB
• lmt-20240929_lab.xml (EX-101.LAB) — 527KB
• lmt-20240929_pre.xml (EX-101.PRE) — 359KB
• lmt-20240929_htm.xml (XML) — 1508KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (Unaudited)

ITEM 1. Financial Statements (Unaudited) Consolidated Statements of Earnings for the Quarters and Nine Months Ended September 29, 2024 and September 24, 2023 3 Consolidated Statements of Comprehensive Income for the Quarters and Nine Months Ended September 29, 2024 and September 24, 2023 4 Consolidated Balance Sheets as of September 29, 2024 and December 31, 2023 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 29, 2024 and September 24 2023 6 Consolidated Statements of Equity for the Quarters Ended September 29, 2024 and September 24, 2023 7 Consolidated Statements of Equity for the Nine Months Ended September 29, 2024 and September 24, 2023 8

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 9 Report of Independent Registered Public Accounting Firm 28

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 29

Quantitative and Qualitative Disclosures About Market Risk

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 45

Controls and Procedures

ITEM 4. Controls and Procedures 45

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

ITEM 1. Legal Proceedings 46

Risk Factors

ITEM 1A. Risk Factors 47

Unregistered Sales of Equity Securities and Use of Proceeds

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 47

Other Information

ITEM 5. Other Information 48

Exhibits

ITEM 6. Exhibits 48 SIGNATURE 49 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 Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 Net sales Products $ 14,472 $ 14,014 $ 43,777 $ 40,298 Services 2,632 2,864 8,644 8,399 Total net sales 17,104 16,878 52,421 48,697 Cost of sales Products ( 12,964 ) ( 12,571 ) ( 39,368 ) ( 35,960 ) Services ( 2,272 ) ( 2,510 ) ( 7,457 ) ( 7,436 ) Impairment and severance charges — — ( 87 ) — Other unallocated, net 249 251 731 883 Total cost of sales ( 14,987 ) ( 14,830 ) ( 46,181 ) ( 42,513 ) Gross profit 2,117 2,048 6,240 6,184 Other income (expense), net 23 ( 6 ) 77 30 Operating profit 2,140 2,042 6,317 6,214 Interest expense ( 256 ) ( 237 ) ( 772 ) ( 662 ) Non-service FAS pension income 16 111 47 332 Other non-operating income, net 18 37 109 69 Earnings before income taxes 1,918 1,953 5,701 5,953 Income tax expense ( 295 ) ( 269 ) ( 892 ) ( 899 ) Net earnings $ 1,623 $ 1,684 $ 4,809 $ 5,054 Earnings per common share Basic $ 6.83 $ 6.75 $ 20.12 $ 20.04 Diluted $ 6.80 $ 6.73 $ 20.05 $ 19.97 Cash dividends paid per common share $ 3.15 $ 3.00 $ 9.45 $ 9.00 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 Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 Net earnings $ 1,623 $ 1,684 $ 4,809 $ 5,054 Other comprehensive income, net of tax Postretirement benefit plans Amortization of actuarial losses and prior service credits, net of tax expense of $ 6 million and $ 16 million in 2024 and $ 10 million and $ 30 million in 2023 19 ( 37 ) 57 ( 111 ) Other, net, net of tax benefits of $ 3 million and expense of $ 5 million in 2024 and expense of $ 5

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 Nine Months Ended September 29, 2024 September 24, 2023 September 29, 2024 September 24, 2023 Net sales Aeronautics $ 6,487 $ 6,717 $ 20,609 $ 19,861 Missiles and Fire Control 3,175 2,939 9,270 8,082 Rotary and Mission Systems 4,367 4,121 13,003 11,528 Space 3,075 3,101 9,539 9,226 Total net sales $ 17,104 $ 16,878 $ 52,421 $ 48,697 Operating profit Aeronautics $ 659 $ 671 $ 2,089 $ 2,064 Missiles and Fire Control 456 398 1,217 1,146 Rotary and Mission Systems 483 482 1,408 1,286 Space 272 259 943 851 Total business segment operating profit 1,870 1,810 5,657 5,347 Unallocated items FAS/CAS pension operating adjustment 406 414 1,218 1,245 Impairment and severance charges (a) — — ( 87 ) — Intangible asset amortization expense ( 61 ) ( 61 ) ( 183 ) ( 185 ) Other, net ( 75 ) ( 121 ) ( 288 ) ( 193 ) Total unallocated items 270 232 660 867 Total consolidated operating profit $ 2,140 $ 2,042 $ 6,317 $ 6,214 Intersegment sales Aeronautics $ 125 $ 62 $ 262 $ 186 Missiles and Fire Control 210 177 616 482 Rotary and Mission Systems 569 518 1,729 1,512 Space 94 97 300 275 Total intersegment sales $ 998 $ 854 $ 2,907 $ 2,455 (a) Impairment and severance charges of $ 87 million ($ 69 million, or $ 0.29 per share, after-tax) include trademark and fixed asset impairments as well as severance c osts recorded in the second quarter of 202

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Unallocated Items Business segment operating profit excludes the FAS/CAS pension operating adjustment discussed below, 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 deferred compensation plans, retiree benefits, significant severance charges, significant asset impairments, gains or 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 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 segments' 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 incom

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): Quarter Ended September 29, 2024 Aeronautics MFC RMS Space Total Net sales Products $ 5,550 $ 2,811 $ 3,554 $ 2,557 $ 14,472 Services 937 364 813 518 2,632 Total net sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Net sales by contract type Fixed-price $ 4,276 $ 2,211 $ 2,691 $ 865 $ 10,043 Cost-reimbursable 2,211 964 1,676 2,210 7,061 Total net sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Net sales by customer U.S. Government $ 4,465 $ 2,272 $ 2,867 $ 3,081 $ 12,685 International (a) 1,973 901 1,403 61 4,338 U.S. commercial and other 49 2 97 ( 67 ) 81 Total net sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Net sales by geographic region United States $ 4,514 $ 2,274 $ 2,964 $ 3,014 $ 12,766 Europe 1,047 334 309 18 1,708 Asia Pacific 612 216 632 43 1,503 Middle East 206 333 190 — 729 Other 108 18 272 — 398 Total net sales $ 6,487 $ 3,175 $ 4,367 $ 3,075 $ 17,104 Nine Months Ended September 29, 2024 Aeronautics MFC RMS Space Total Net sales Products $ 17,113 $ 8,217 $ 10,500 $ 7,947 $ 43,777 Services 3,496 1,053 2,503 1,592 8,644 Total net sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Net sales by contract type Fixed-price $ 13,805 $ 6,331 $ 7,980 $ 2,690 $ 30,806 Cost-reimbursable 6,804 2,939 5,023 6,849 21,615 Total net sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Net sales by customer U.S. Government $ 14,072 $ 6,680 $ 8,706 $ 9,350 $ 38,808 International (a) 6,422 2,581 4,035 174 13,212 U.S. commercial and other 115 9 262 15 401 Total net sales $ 20,609 $ 9,270 $ 13,003 $ 9,539 $ 52,421 Net sales by geographic region United States $ 14,187 $ 6,689 $ 8,968 $ 9,365 $ 39,209 Europe 3,528 788 860 55 5,231 Asia Pacific 1,933 583 1,922 114 4,552 Middle East 603 1,153 552 5 2,313 Other 358 57 701 — 1,116 T

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) Quarter Ended September 24, 2023 Aeronautics MFC RMS Space Total Net sales Products $ 5,538 $ 2,609 $ 3,249 $ 2,618 $ 14,014 Services 1,179 330 872 483 2,864 Total net sales $ 6,717 $ 2,939 $ 4,121 $ 3,101 $ 16,878 Net sales by contract type Fixed-price $ 4,495 $ 2,017 $ 2,602 $ 796 $ 9,910 Cost-reimbursable 2,222 922 1,519 2,305 6,968 Total net sales $ 6,717 $ 2,939 $ 4,121 $ 3,101 $ 16,878 Net sales by customer U.S. Government $ 4,547 $ 2,061 $ 2,796 $ 3,055 $ 12,459 International (a) 2,170 875 1,254 24 4,323 U.S. commercial and other — 3 71 22 96 Total net sales $ 6,717 $ 2,939 $ 4,121 $ 3,101 $ 16,878 Net sales by geographic region United States $ 4,547 $ 2,064 $ 2,867 $ 3,077 $ 12,555 Europe 1,190 197 269 1 1,657 Asia Pacific 693 155 601 22 1,471 Middle East 220 474 185 1 880 Other 67 49 199 — 315 Total net sales $ 6,717 $ 2,939 $ 4,121 $ 3,101 $ 16,878 Nine Months Ended September 24, 2023 Aeronautics MFC RMS Space Total Net sales Products $ 16,339 $ 7,110 $ 9,082 $ 7,767 $ 40,298 Services 3,522 972 2,446 1,459 8,399 Total net sales $ 19,861 $ 8,082 $ 11,528 $ 9,226 $ 48,697 Net sales by contract type Fixed-price $ 13,463 $ 5,498 $ 7,261 $ 2,359 $ 28,581 Cost-reimbursable 6,398 2,584 4,267 6,867 20,116 Total net sales $ 19,861 $ 8,082 $ 11,528 $ 9,226 $ 48,697 Net sales by customer U.S. Government $ 13,285 $ 5,553 $ 7,973 $ 9,084 $ 35,895 International (a) 6,453 2,521 3,349 110 12,433 U.S. commercial and other 123 8 206 32 369 Total net sales $ 19,861 $ 8,082 $ 11,528 $ 9,226 $ 48,697 Net sales by geographic region United States $ 13,408 $ 5,561 $ 8,179 $ 9,116 $ 36,264 Europe 3,466 582 706 48 4,802 Asia Pacific 2,058 472 1,593 60 4,183 Middle East 671 1,340 526 2 2,539 Other 258 127 524 — 909 Total net sales $ 19,861 $ 8,082 $ 11,528 $ 9,226 $ 48,697 (a) International sales include foreign military sales (FMS) contracted through the U.S. Govern

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 22 % and 24 % of our total consolidated net sales for the quarter and nine months ended September 29, 2024 and 26 % of our total consolidated net sales for both the quarter and nine months ended September 24, 2023. Assets Total assets for each of our business segments were as follows (in millions): September 29, 2024 December 31, 2023 Assets Aeronautics $ 13,987 $ 13,167 Missiles and Fire Control 5,853 5,703 Rotary and Mission Systems 17,313 17,521 Space 6,652 6,560 Total business segment assets 43,805 42,951 Corporate assets (a) 11,715 9,505 Total assets $ 55,520 $ 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): September 29, 2024 December 31, 2023 Contract assets $ 14,224 $ 13,183 Contract liabilities 9,051 9,190 Contract assets increased $ 1.0 billion during the nine months ended September 29, 2024, due to the recognition of revenue related to the satisfaction or partial satisfaction of performance obligations during the nine months ende

Notes to Consolidated Financial Statements (unaudited) (continued)

Notes to Consolidated Financial Statements (unaudited) (continued) NOTE 5 - INVENTORIES Inventories consisted of the following (in millions): September 29, 2024 December 31, 2023 Materials, spares and supplies $ 616 $ 606 Work-in-process 2,430 2,338 Finished goods 188 188 Total inventories $ 3,234 $ 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 September 29, 2024 and December 31, 2023, $ 1.9 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. The increase in pre-contract costs as of September 29, 2024 is primarily driven by the F-35 program, specifically delays in receiving additional contractual authorization and funding for the Lots 18-19 contract. 15 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 milli

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