LMT Financial Analysis

Analysis Date: 1/29/2025

Business Model

Lockheed Martin generates revenue primarily through defense contracts with the U.S. government and international customers

Revenue Sources

• Aeronautics (40% of revenue) - F-35, F-16, C-130J aircraft programs
• Missiles and Fire Control (18% of revenue) - PAC-3, THAAD, GMLRS systems
• Rotary & Mission Systems (24% of revenue) - Helicopters, ship systems, C6ISR
• Space (18% of revenue) - Satellites, hypersonics, strategic missile defense

Revenue Distribution by Channel

• U.S. Government & Military: ~70% of revenue
• International: ~30% of revenue

Income Statement Analysis

• Revenue declined 1.3% YoY due to lower volume across segments
• Gross margin contracted significantly from 12.2% to 3.7% due to classified program losses
• Operating profit fell 69.6% primarily due to $1.7B in classified program losses

Balance Sheet Analysis

• Cash position strengthened significantly, up 72% YoY to $2.5B
• Total assets increased 6% YoY to $55.6B
• Stockholders' equity declined 7.3% due to share repurchases and dividends

Cash Flow Analysis

• Operating cash flow declined 12% YoY primarily due to $990M pension contribution
• Capital expenditures remained stable at $1.7B
• Free cash flow decreased 15.1% but remained strong at $5.3B

Capital Allocation

Returned $6.8B to shareholders in 2024 through $3.1B in dividends and $3.7B in share repurchases. Made $990M pension contribution. Invested $3.3B in R&D and capital expenditures.

Management Commentary

Achieved 5% sales growth and record backlog of $176B in 2024

Successfully derisked classified programs in Q4

Strong 2025 outlook with mid-single digit growth and 11% margins

Recorded $1.7B in classified program losses in Q4

Overall Sentiment: Cautiously optimistic, focused on execution and growth in 2025 after taking necessary derisking actions

Recommendation

Rating: Buy

Reason for Rating: Strong fundamentals and growth outlook after derisking actions

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/29/2025, 8:10:40 AM