BETHESDA, Md., July 26, 2021 /PRNewswire/ -- Lockheed Martin Corporation [NYSE: LMT] today reported second quarter 2021 net sales of $17.0 billion, compared to $16.2 billion in the second quarter of 2020. Net earnings in the second quarter of 2021 were $1.8 billion, or $6.52 per share, compared to $1.6 billion, or $5.79 per share, in the second quarter of 2020. Second quarter 2021 net earnings include a loss of $225 million ($169 million, or $0.61 per share, after tax), recorded at Aeronautics, related to performance issues experienced on a classified program. Net earnings for the second quarter 2020 include a noncash impairment charge of $128 million ($96 million, or $0.34 per share, after tax) for an investment in a joint venture that the company sold. Cash from operations in the second quarter of 2021 was $1.3 billion, compared to $2.2 billion in the second quarter of 2020.

"In my first year leading our company, I'm proud of the extraordinary resolve demonstrated by our 114,000 team members to rise above the challenges of the pandemic in support of our customers, our nation and our allies. This is reflected in our solid sales growth across each business area this quarter," said Lockheed Martin Chairman, President and CEO James Taiclet. "Our teams continue to deliver on key platform programs while also advancing technologies critical for 21st century deterrence and scientific discovery. And as a result, we are maintaining our prior guidance for full-year sales, segment operating profit, and cash from operations, while raising guidance for full-year EPS."

Summary Financial Results

The following table presents the company's summary financial results.


(in millions, except per share data)


Quarters Ended1


Six Months Ended





June 27,

2021


June 28,

2020


June 27,

2021


June 28,

2020



Net sales


$

17,029



$

16,220



$

33,287



$

31,871















Business segment operating profit2,3


$

1,766



$

1,790



$

3,515



$

3,515




Unallocated items











FAS/CAS operating adjustment


489



469



978



938




Severance and restructuring charges






(36)






Other, net4


(63)



(173)



(83)



(245)




Total unallocated items


426



296



859



693




Consolidated operating profit


$

2,192



$

2,086



$

4,374



$

4,208















Net earnings


$

1,815



$

1,626



$

3,652



$

3,343















Diluted earnings per share


$

6.52



$

5.79



$

13.08



$

11.87















Cash from operations5


$

1,268



$

2,182



$

3,016



$

4,496














1

The company closes its books and records on the last Sunday of the calendar quarter to align its financial closing with its business processes,
which was on June 27 for the second quarter of 2021 and June 28 for the second quarter of 2020. The consolidated financial statements and
tables of financial information included herein are labeled based on that convention. This practice only affects interim periods, as the company's
fiscal year ends on Dec. 31.


2

Business segment operating profit is a non-GAAP measure. See the "Non-GAAP Financial Measures" section of this news release for more
information.


3

The company has experienced performance issues on a classified program at its Aeronautics business segment. During the second quarter of
2021, the company completed a comprehensive review of the program and determined that estimated total costs to complete the program are
expected to exceed the contract price. As a result, the company recorded a loss of $225 million ($169 million, or $0.61 per share, after tax) at its
Aeronautics business segment.


4

In the second quarter of 2020, the company recognized a noncash impairment charge of $128 million ($96 million, or $0.34 per share, after
tax) for its investment in the international equity method investee, Advanced Military Maintenance, Repair and Overhaul Center (AMMROC),
which the company sold.


5

Cash from operations in the second quarter of 2021 reflects federal income tax payments of $640 million and cash payments for the employer
portion of payroll taxes of $182 million, compared to no payments in the second quarter of 2020 due to the deferral of $400 million of federal tax
payments from the second quarter of 2020 to the third quarter of 2020 pursuant to IRS guidance and $160 million for the employer portion of
payroll taxes from the second quarter of 2020 to fourth quarters of 2021 and 2022 pursuant to the Coronavirus Aid, Relief, and Economic
Security Act
(CARES Act).


2021 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, 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 Guidance1


April 2021 Outlook1










Net sales


$67,300 - $68,700


$67,300 - $68,700










Business segment operating profit


$7,380 - $7,520


$7,380 - $7,520










Net FAS/CAS pension adjustment2


~$2,330


~$2,330










Diluted earnings per share


$26.70 - $27.00


$26.40 - $26.70










Cash from operations


≥$8,900


≥$8,900









1

The company's 2021 financial outlook reflects the anticipated impacts from the COVID-19 pandemic based on the company's understanding at
the time of this news release. However, the ultimate impacts of COVID-19 on the company's financial outlook for 2021 and beyond remains
uncertain and there can be no assurance that the company's underlying assumptions are correct. Additionally, the 2021 financial outlook reflects
the UK Ministry of Defence's renationalization of the Atomic Weapons Establishment program on June 30, 2021. The 2021 financial outlook also
reflects the impact of the unrealized and realized gains from investments held by the Lockheed Martin Ventures Fund year to date, but does not
include any future gains or losses related to market volatility and changes in valuations of the company's investment holdings. Further, the 2021
financial outlook does not incorporate the pending acquisition of Aerojet Rocketdyne Holdings, Inc. previously announced on Dec. 20, 2020.


2

The net FAS/CAS pension adjustment is presented as a single amount and includes total expected U.S. Government cost accounting standards
(CAS) pension cost of approximately $2,065 million and total expected financial accounting standards (FAS) pension income of approximately
$265 million. CAS pension cost and the service cost component of FAS pension income are included in operating profit. The non-service cost
components of FAS pension income are included in non-operating income. For additional detail regarding the pension amounts reported in
operating and non-operating results, refer to the supplemental table included at the end of this news release.








Cash Activities

The company's cash activities in the second quarter of 2021, included the following:

  • making capital expenditures of $318 million, compared to $343 million in the second quarter of 2020;
  • paying cash dividends of $721 million, compared to $671 million in the second quarter of 2020;
  • repurchasing 1.3 million shares for $500 million pursuant to an accelerated share repurchase agreement (ASR) (and retiring an additional 1.0 million shares for a first quarter 2021 ASR that settled in the second quarter of 2021); compared to repurchasing 0.7 million shares for $259 million in the second quarter of 2020 (and retiring an additional 0.4 million shares for a first quarter 2020 ASR that settled in the second quarter of 2020); and
  • accelerating $1.4 billion of payments to suppliers in the second quarter 2021 that were due in the third quarter of 2021; compared to accelerating $1.3 billion of payments to suppliers in the second quarter 2020 that were due in the third quarter of 2020.

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


Six Months Ended





June 27,
2021


June 28,
2020


June 27,
2021


June 28,
2020



Net sales











Aeronautics


$

6,666



$

6,503



$

13,053



$

12,872




Missiles and Fire Control


2,944



2,801



5,693



5,420




Rotary and Mission Systems


4,242



4,039



8,349



7,785




Space


3,177



2,877



6,192



5,794




Total net sales


$

17,029



$

16,220



$

33,287



$

31,871















Operating profit











Aeronautics


$

572



$

739



$

1,265



$

1,411




Missiles and Fire Control


401



370



797



766




Rotary and Mission Systems


458



429



891



805




Space


335



252



562



533




Total business segment operating profit


1,766



1,790



3,515



3,515




Unallocated items











FAS/CAS operating adjustment


489



469



978



938




Severance and restructuring charges






(36)






Other, net


(63)



(173)



(83)



(245)




Total unallocated items


426



296



859



693




Total consolidated operating profit


$

2,192



$

2,086



$

4,374



$

4,208

























Net sales and operating profit of the company's business segments exclude intersegment sales, cost of sales, and profit as these activities are eliminated in consolidation. Operating profit of the company's business segments includes the company's share of earnings or losses from equity method investees as the operating activities of the investees are closely aligned with the operations of its business segments.

Operating profit of the company's business segments also excludes the FAS/CAS pension operating adjustment described 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, environmental costs, stock-based compensation expense, retiree benefits, significant severance actions, significant asset impairments, gains or losses from divestitures, and other miscellaneous corporate activities.

The company recovers CAS pension cost through the pricing of its products and services on U.S. Government contracts and, therefore, recognizes CAS pension cost in each of its business segments' net sales and cost of sales. The company's consolidated financial statements must present pension and other postretirement benefit plan income calculated in accordance with FAS requirements under U.S. generally accepted accounting principles. The operating portion of the net FAS/CAS pension adjustment represents the difference between the service cost component of FAS pension income and total CAS pension cost. The non-service FAS pension income component is included in other non-operating income. The net FAS/CAS pension adjustment increases or decreases CAS pension cost to equal total FAS pension income (both service and non-service).

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 operating profit are typically based on the current profit booking rate for a particular contract. In addition, comparability of the company's segment sales, operating profit and operating margin may be impacted favorably or unfavorably by changes in profit booking rates on the company's contracts for which it recognizes revenue over time using the percentage-of-completion cost-to-cost method to measure progress towards completion. Increases in profit booking rates, typically referred to as risk retirements, usually relate to revisions in the estimated total costs to fulfill the performance obligations that reflect improved conditions on a particular contract. Conversely, conditions on a particular contract may deteriorate, resulting in an increase in the estimated total costs to fulfill the performance obligations and a reduction in the profit booking rate. Increases or decreases in profit booking rates are recognized in the current period and reflect the inception-to-date effect of such changes.

Segment operating profit and margin may also be impacted favorably or unfavorably by other items, which may or may not impact sales. Favorable items may include the positive resolution of contractual matters, cost recoveries on severance and restructuring charges, insurance recoveries and gains on sales of assets. Unfavorable items may include the adverse resolution of contractual matters; restructuring charges, except for significant severance actions which are excluded from segment operating results; reserves for disputes; certain asset impairments; and losses on sales of certain assets. 

The company's consolidated net adjustments not related to volume, including net profit booking rate adjustments, represented approximately 22% of total segment operating profit in the second quarter of 2021, as compared to 27% in the second quarter of 2020.

Aeronautics 


(in millions)


Quarters Ended


Six Months Ended





June 27,
2021


June 28,
2020


June 27,
2021


June 28,
2020



Net sales


$

6,666



$

6,503



$

13,053



$

12,872




Operating profit


572



739



1,265



1,411




Operating margin


8.6

%


11.4

%


9.7

%


11.0

%


Aeronautics' net sales during the second quarter of 2021 increased $163 million, or 3%, compared to the same period in 2020. The increase was primarily attributable to about $100 million for the F-16 program due to increased production volume that was partially offset by decreased sustainment volume; and about $90 million for the F-35 program due to increased production and sustainment volume that was partially offset by decreased development activities. These increases were partially offset by lower net sales of approximately $60 million for the F-22 program due to decreased sustainment volume.

Aeronautics' operating profit during the second quarter of 2021 decreased $167 million, or 23%, compared to the same period in 2020. Operating profit decreased due to a loss of approximately $225 million in the second quarter of 2021 for performance issues experienced on a classified program; and about $20 million for the F-22 program due to lower risk retirements and sustainment volume. These decreases were partially offset by higher operating profit of approximately $45 million for the C-130 program primarily due to higher risk retirements on sustainment activities; and about $20 million for the F-16 program due to increased production volume and higher risk retirements. Operating profit for the F-35 program was comparable as higher production and sustainment volume was offset by lower risk retirements. Adjustments not related to volume, including net profit booking rate adjustments, were $180 million lower in the second quarter of 2021 compared to the same period in 2020.

Missiles and Fire Control


(in millions)


Quarters Ended


Six Months Ended





June 27,
2021


June 28,
2020


June 27,
2021


June 28,
2020



Net sales


$

2,944



$

2,801



$

5,693



$

5,420




Operating profit


401



370



797



766




Operating margin


13.6

%


13.2

%


14.0

%


14.1

%


MFC's net sales during the second quarter of 2021 increased $143 million, or 5%, compared to the same period in 2020. The increase was primarily attributable to higher net sales of approximately $110 million for tactical and strike missile programs due to higher production volume (Army Tactical Missile System (ATACMS) and Long Range Anti-Ship Missile (LRASM)); and about $35 million for sensors and global sustainment programs due to higher service volume (primarily Special Operations Forces Global Logistics Support Services (SOF GLSS)) and close out activities related to the Warrior Capability Sustainment Program (Warrior) that was terminated by the customer in March 2021.

MFC's operating profit during the second quarter of 2021 increased $31 million, or 8%, compared to the same period in 2020. Operating profit increased approximately $45 million for sensors and global sustainment programs primarily due to the reversal of the portion of previously recorded losses on the Warrior program in the second quarter of 2021 that are no longer expected to be incurred as a result of the program being terminated. This increase was partially offset by lower operating profit of approximately $15 million on integrated air and missile defense programs due to lower risk retirements (primarily Terminal High Altitude Area Defense (THAAD)). Operating profit for tactical and strike missile programs was comparable as higher production volume (ATACMS and LRASM) was offset by lower volume on the Long Range Stand-Off program. Adjustments not related to volume, including net profit booking rate adjustments, were $25 million higher in the second quarter of 2021 compared to the same period in 2020.

Rotary and Mission Systems


(in millions)


Quarters Ended


Six Months Ended





June 27,
2021


June 28,
2020


June 27,
2021


June 28,
2020



Net sales


$

4,242



$

4,039



$

8,349



$

7,785




Operating profit


458



429



891



805




Operating margin


10.8

%


10.6

%


10.7

%


10.3

%


RMS' net sales during the second quarter of 2021 increased $203 million, or 5%, compared to the same period in 2020. The increase was attributable to higher net sales of approximately $230 million for Sikorsky helicopter programs due to higher production volume on the Black Hawk, Combat Rescue Helicopter (CRH), and CH-53K programs that was partially offset by lower production volume on Seahawk programs. This increase was partially offset by lower net sales of about $35 million for integrated warfare systems and sensors (IWSS) programs due to lower volume on the TPQ-53 and the Littoral Combat Ship (LCS) programs that was partially offset by higher volume on the Canadian Surface Combatant (CSC) and Aegis Combat System (Aegis) programs.

RMS' operating profit during the second quarter of 2021 increased $29 million, or 7%, compared to the same period in 2020. Operating profit increased approximately $20 million for Sikorsky helicopter programs due to higher production volume on the Black Hawk, CRH, and CH-53K programs. Operating profit for IWSS programs was comparable as risk retirements on a ground-based radar program were offset by lower risk retirements on the LCS program. Adjustments not related to volume, including net profit booking rate adjustments, were comparable in the second quarter of 2021 to the same period in 2020.

Space


(in millions)


Quarters Ended


Six Months Ended





June 27,
2021


June 28,
2020


June 27,
2021


June 28,
2020



Net sales


$

3,177



$

2,877



$

6,192



$

5,794




Operating profit


335



252



562



533




Operating margin


10.5

%


8.8

%


9.1

%


9.2

%


Space's net sales during the second quarter of 2021 increased $300 million, or 10%, compared to the same period in 2020. The increase was primarily attributable to higher net sales of approximately $125 million for the Atomic Weapons Establishment (AWE) program due to higher volume; about $100 million for national security space programs due to higher volume (primarily Next Generation Overhead Persistent Infrared (Next Gen OPIR)); and about $80 million for strategic and missile defense programs due to higher volume (primarily hypersonic development programs). As previously disclosed, effective June 30, 2021 (subsequent to the second quarter), the UK Ministry of Defence renationalized the AWE program. Accordingly, the AWE program will no longer be included in the company's financial results beginning in the third quarter of 2021.

Space's operating profit during the second quarter of 2021 increased $83 million, or 33%, compared to the same period in 2020. Operating profit increased approximately $45 million for national security space programs primarily due to higher risk retirements (primarily Space-Based Infrared System (SBIRS)) and higher volume (primarily Next Gen OPIR); and about $35 million due to higher equity earnings from the company's investment in United Launch Alliance (ULA). Operating profit for the AWE program was comparable as higher volume was offset by accelerated and incremental amortization expense for intangible assets. Operating profit for strategic and missile defense programs was also comparable as higher volume (hypersonic development programs) was offset by lower risk retirements (primarily Fleet Ballistic Missile (FBM) programs). Adjustments not related to volume, including net profit booking rate adjustments, were $65 million higher in the second quarter of 2021 compared to the same period in 2020.

Total equity earnings (primarily ULA) recognized in Space's operating profit were approximately $45 million, or 13% of Space's operating profit during the second quarter of 2021, compared to approximately $10 million, or 4% in the second quarter of 2020.

Income Taxes

The company's effective income tax rate was 16.4% for the second quarter of 2021 and 17.1% for the second quarter of 2020. The rate for the second quarter of 2021 is lower primarily due to increased tax deductions for foreign derived intangible income. The rates for both periods benefited from tax deductions for foreign derived intangible income, the research and development tax credit, and dividends paid to the company's defined contribution plans with an employee stock ownership plan feature.

Use of Non-GAAP Financial Measures

This news release contains the following non-generally accepted accounting principles (non-GAAP) financial measures (as defined by U.S. Securities and Exchange Commission (SEC) Regulation G). While management believes that these non-GAAP financial measures may be useful in evaluating the financial performance of the company, this information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP. In addition, the company's definitions for non-GAAP financial measures may differ from similarly titled measures used by other companies or analysts.

Business segment operating profit represents operating profit from the company's business segments before unallocated income and expense. This measure is used by the company's senior management in evaluating the performance of its business segments and is a performance goal in the company's annual incentive plan. Business segment operating margin is calculated by dividing business segment operating profit by sales. The table below reconciles the non-GAAP measure business segment operating profit with the most directly comparable GAAP financial measure, consolidated operating profit.


(in millions)

 


Current Update1


April 20211



Business segment operating profit (non-GAAP)


$7,380 - $7,520


$7,380 - $7,520



FAS/CAS operating adjustment2


~1,955


~1,955



Other, net


~(300)


~(355)



Consolidated operating profit (GAAP)


$9,035 - $9,175


$8,980 - $9,120









1

The company's 2021 financial outlook reflects the anticipated impacts from the COVID-19 pandemic based on the company's understanding at
the time of this news release. However, the ultimate impacts of COVID-19 on the company's financial outlook for 2021 and beyond remains
uncertain and there can be no assurance that the company's underlying assumptions are correct. Additionally, the 2021 financial outlook reflects
the UK Ministry of Defence's renationalization of the AWE program on June 30, 2021. Further, the 2021 financial outlook does not incorporate
the pending acquisition of Aerojet Rocketdyne Holdings, Inc. announced on Dec. 20, 2020.


2

Refer to the supplemental table "Other Financial and Operating Information" included in this news release for a detail of the FAS/CAS operating
adjustment, which excludes $375 million of expected non-service FAS income that will be recorded in non-operating income (expense).





Conference Call Information

Lockheed Martin Corporation will webcast live the earnings results conference call (listen-only mode) on Monday, July 26, 2021, at 11 a.m. ET. The live webcast and relevant financial charts will be available for download on the Lockheed Martin Investor Relations website at www.lockheedmartin.com/investor.

For additional information, visit the company's website: www.lockheedmartin.com.

About Lockheed Martin

Headquartered in Bethesda, Maryland, Lockheed Martin Corporation is a global security and aerospace company that employs approximately 114,000 people worldwide and is principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services.

Forward-Looking Statements

This news release contains statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the federal securities laws, and are based on Lockheed Martin's current expectations and assumptions. The words "believe," "estimate," "anticipate," "project," "intend," "expect," "plan," "outlook," "scheduled," "forecast" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially due to factors such as:

  • the impact of COVID-19 or future epidemics on the company's business, including potential supply chain disruptions, facility closures, work stoppages, program delays, payment policies and regulations and the company's ability to recover its costs under contracts;
  • budget uncertainty, the risk of future budget cuts, the debt ceiling and the potential for government shutdowns and changing funding and acquisition priorities;
  • the company's reliance on contracts with the U.S. Government, which are dependent on U.S. Government funding and can be terminated for convenience, and the company's ability to negotiate favorable contract terms;
  • risks related to the development, production, sustainment, performance, schedule, cost and requirements of complex and technologically advanced programs including the company's largest, the F-35 program;
  • planned production rates and orders for significant programs; compliance with stringent performance and reliability standards; materials availability;
  • performance and financial viability of key suppliers, teammates, joint ventures and partners, subcontractors and customers;
  • economic, industry, business and political conditions including their effects on governmental policy and government actions that disrupt the company's supply chain or prevent the sale or delivery of its products (such as delays in approvals for exports requiring Congressional notification);
  • trade policies or sanctions (including potential Chinese sanctions on the company or its suppliers, teammates or partners; U.S. Government sanctions on Turkey and its removal from the F-35 program and potential U.S. Government actions to restrict sales to the Kingdom of Saudi Arabia and the United Arab Emirates);
  • the company's success expanding into and doing business in adjacent markets and internationally and the differing risks posed by international sales;
  • changes in foreign national priorities and foreign government budgets and planned orders;
  • the competitive environment for the company's products and services, including increased pricing pressures, aggressive pricing in the absence of cost realism evaluation criteria, competition from outside the aerospace and defense industry, and bid protests;
  • the timing and customer acceptance of product deliveries and performance milestones;
  • the company's ability to develop new technologies and products, including emerging digital and network technologies and capabilities;
  • the company's ability to attract and retain a highly skilled workforce; the impact of work stoppages or other labor disruptions;
  • cyber or other security threats or other disruptions faced by the company or its suppliers;
  • the company's ability to implement and continue, and the timing and impact of, capitalization changes such as share repurchases and dividend payments;
  • the company's ability to recover costs under U.S. Government contracts and changes in contract mix;
  • the accuracy of the company's estimates and projections;
  • the impact of pension risk transfers, including potential noncash settlement charges; timing and estimates regarding pension funding and movements in interest rates and other changes that may affect pension plan assumptions, stockholders' equity, the level of the FAS/CAS adjustment; actual returns on pension plan assets and the impact of the American Rescue Plan Act of 2021;
  • the successful operation of joint ventures that the company does not control;
  • realizing the anticipated benefits of acquisitions or divestitures, investments, joint ventures, teaming arrangements or internal reorganizations, and market volatility in the fair value of investments in the company's Lockheed Martin Ventures Fund that are marked to market;
  • risks related to the company's proposed acquisition of Aerojet Rocketdyne, including the failure to obtain, delays in obtaining or adverse conditions contained in any required regulatory approvals and the company's ability to successfully and timely integrate the business and realize synergies and other expected benefits of the transaction;
  • the company's efforts to increase the efficiency of its operations and improve the affordability of its products and services;
  • the risk of an impairment of the company's assets, including the potential impairment of goodwill recorded as a result of the acquisition of the Sikorsky business;
  • the availability and adequacy of the company's insurance and indemnities;
  • the company's ability to benefit fully from or adequately protect its intellectual property rights;
  • procurement and other regulations and policies affecting the company's industry, export of its products, cost allowability or recovery, preferred contract type, and performance and progress payments policy, including a reversal or modification to the DoD's increase to the progress payment rate in response to COVID-19;
  • changes in accounting, U.S. or foreign tax, export or other laws, regulations, and policies and their interpretation or application; and
  • the outcome of legal proceedings, bid protests, environmental remediation efforts, audits, government investigations or government allegations that the company has failed to comply with law, other contingencies and U.S. Government identification of deficiencies in its business systems.

These are only some of the factors that may affect the forward-looking statements contained in this news release. For a discussion identifying additional important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see the company's filings with the U.S. Securities and Exchange Commission including, but not limited to, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2020, and subsequent quarterly reports on Form 10-Q. The company's filings may be accessed through the Investor Relations page of its website, www.lockheedmartin.com/investor, or through the website maintained by the SEC at www.sec.gov.

The company's actual financial results likely will be different from those projected due to the inherent nature of projections. Given these uncertainties, forward-looking statements should not be relied on in making investment decisions. The forward-looking statements contained in this news release speak only as of the date of its filing. Except where required by applicable law, the company expressly disclaims a duty to provide updates to forward-looking statements after the date of this news release to reflect subsequent events, changed circumstances, changes in expectations, or the estimates and assumptions associated with them. The forward-looking statements in this news release are intended to be subject to the safe harbor protection provided by the federal securities laws.


 

Lockheed Martin Corporation

Consolidated Statements of Earnings1

(unaudited; in millions, except per share data)   





Quarters Ended


Six Months Ended




June 27,
2021


June 28,
2020


June 27,
2021


June 28,
2020


Net sales


$

17,029



$

16,220



$

33,287



$

31,871



Cost of sales


(14,878)



(14,007)



(28,950)



(27,567)



Gross profit


2,151



2,213



4,337



4,304



Other income (expense), net2


41



(127)



37



(96)



Operating profit3


2,192



2,086



4,374



4,208



Interest expense


(142)



(149)



(282)



(297)



Other non-operating income, net


120



25



289



81



Earnings before income taxes


2,170



1,962



4,381



3,992



Income tax expense


(355)



(336)



(729)



(649)



Net earnings


$

1,815



$

1,626



$

3,652



$

3,343



Effective tax rate


16.4

%


17.1

%


16.6

%


16.3

%












Earnings per common share










Basic


$

6.54



$

5.81



$

13.13



$

11.92



Diluted


$

6.52



$

5.79



$

13.08



$

11.87













Weighted average shares outstanding










Basic


277.4



279.8



278.1



280.5



Diluted


278.4



280.8



279.1



281.7













Common shares reported in stockholders'

  equity at end of period






276



278












1

The company closes its books and records on the last Sunday of the calendar quarter to align its financial closing with its business processes, which was on June 27 for the second quarter of 2021 and June 28 for the second quarter of 2020. The consolidated financial statements and tables of financial information included herein are labeled based on that convention. This practice only affects interim periods, as the company's fiscal year ends on Dec. 31.

2

In the second quarter of 2020, the company recognized a noncash impairment charge of $128 million ($96 million, or $0.34 per share, after tax) for its investment in the international equity method investee, AMMROC which the company has sold.

3

The company has experienced performance issues on a classified program at its Aeronautics business segment. During the second quarter of 2021, the company completed a comprehensive review of the program determined that estimated total costs to complete the program are expected to exceed the contract price. As a result, the company recorded a loss of $225 million ($169 million, or $0.61 per share, after tax) at its Aeronautics business segment.

 

Lockheed Martin Corporation

Business Segment Summary Operating Results

(unaudited; in millions)





Quarters Ended




Six Months Ended






June 27,
2021


June 28,
2020


% Change


June 27,
2021


June 28,
2020


% Change


Net sales














Aeronautics


$

6,666



$

6,503



3%


$

13,053



$

12,872



1%


Missiles and Fire Control


2,944



2,801



5%


5,693



5,420



5%


Rotary and Mission Systems


4,242



4,039



5%


8,349



7,785



7%


Space


3,177



2,877



10%


6,192



5,794



7%


Total net sales


$

17,029



$

16,220



5%


$

33,287



$

31,871



4%
















Operating profit














Aeronautics1


$

572



$

739



(23%)


$

1,265



$

1,411



(10%)


Missiles and Fire Control


401



370



8%


797



766



4%


Rotary and Mission Systems


458



429



7%


891



805



11%


Space


335



252



33%


562



533



5%


Total business segment operating
  profit


1,766



1,790



(1%)


3,515



3,515



—%


Unallocated items














FAS/CAS operating adjustment


489



469





978



938





Severance and restructuring charges








(36)







Other, net2


(63)



(173)





(83)



(245)





Total unallocated items


426



296



44%


859



693



24%


Total consolidated operating 
  profit


$

2,192



$

2,086



5%


$

4,374



$

4,208



4%
















Operating margin














Aeronautics


8.6%


11.4%




9.7%


11.0%




Missiles and Fire Control


13.6%


13.2%




14.0%


14.1%




Rotary and Mission Systems


10.8%


10.6%




10.7%


10.3%




Space


10.5%


8.8%




9.1%


9.2%




Total business segment operating 
 
 margin


10.4%


11.0%




10.6%


11.0%


















Total consolidated operating 
  margin


12.9%


12.9%




13.1%


13.2%

















1

The company has experienced performance issues on a classified program at its Aeronautics business segment. During the second quarter of 2021, the company completed a comprehensive review of the program determined that estimated total costs to complete the program are expected to exceed the contract price. As a result, the company recorded a loss of $225 million ($169 million, or $0.61 per share, after tax) at its Aeronautics business segment.

2

In the second quarter of 2020, the company recognized a noncash impairment charge of $128 million ($96 million, or $0.34 per share, after tax) for its investment in the international equity method investee, AMMROC which the company has sold.

 

Lockheed Martin Corporation

Selected Financial Data

(unaudited; in millions)





Quarters Ended


Six Months Ended




June 27,
2021


June 28,
2020


June 27,

2021


June 28,

2020


Amortization of purchased intangibles










Aeronautics


$

1



$



$

1



$



Missiles and Fire Control






1



1



Rotary and Mission Systems


58



58



116



116



Space


22



7



44



14



Total amortization of purchased

  intangibles


$

81



$

65



$

162



$

131







2021

Outlook


2020

Actual


Total FAS income and CAS costs






FAS pension income


$

265



$

118



Less: CAS pension cost


2,065



1,977



Net FAS/CAS pension adjustment


$

2,330



$

2,095









Service and non-service cost reconciliation






FAS pension service cost


$

(110)



$

(101)



Less: CAS pension cost


2,065



1,977



FAS/CAS operating adjustment


1,955



1,876



Non-operating FAS pension income1


375



219



Net FAS/CAS pension adjustment


$

2,330



$

2,095








1

The company records the non-service cost components of net periodic benefit cost as part of other non-operating income in the consolidated statement of earnings. The non-service cost components in the table above relate only to the company's qualified defined benefit pension plans. The company expects non-service income for its qualified defined benefit pension plans in the table above, along with non-service income for its other postretirement benefit plans of $5 million, to total non-service income of $380 million for 2021. The company recorded non-service cost for its other postretirement benefit plans of $33 million in 2020, in addition to its non-service income for its qualified defined benefit pension plans in the table above, to total non-service income of $186 million in 2020.

 

Lockheed Martin Corporation

Consolidated Balance Sheets

(in millions, except par value)  





June 27,
2021


Dec. 31,

2020




(unaudited)




Assets






Current assets






Cash and cash equivalents


$

2,745



$

3,160



Receivables, net


2,611



1,978



Contract assets


11,425



9,545



Inventories


3,119



3,545



Other current assets


774



1,150



Total current assets


20,674



19,378









Property, plant and equipment, net


7,290



7,213



Goodwill


10,810



10,806



Intangible assets, net


2,849



3,012



Deferred income taxes


3,377



3,475



Other noncurrent assets


7,099



6,826



Total assets


$

52,099



$

50,710









Liabilities and equity






Current liabilities






Accounts payable


$

1,608



$

880



Contract liabilities


7,379



7,545



Salaries, benefits and payroll taxes


3,029



3,163



Current maturities of long-term debt


506



500



Other current liabilities


2,720



1,845



Total current liabilities


15,242



13,933









Long-term debt, net


11,665



11,669



Accrued pension liabilities


12,412



12,874



Other noncurrent liabilities


6,250



6,196



Total liabilities


45,569



44,672









Stockholders' equity






Common stock, $1 par value per share


276



279



Additional paid-in capital


122



221



Retained earnings


21,961



21,636



Accumulated other comprehensive loss


(15,837)



(16,121)



Total stockholders' equity


6,522



6,015



Noncontrolling interests in subsidiary


8



23



Total equity


6,530



6,038



Total liabilities and equity


$

52,099



$

50,710








 

Lockheed Martin Corporation

Consolidated Statements of Cash Flows

(unaudited; in millions)  




Six Months Ended



June 27,

2021


June 28,

2020

Operating activities





Net earnings


$

3,652



$

3,343


Adjustments to reconcile net earnings to net cash provided by operating activities





Depreciation and amortization


670



608


Stock-based compensation


127



115


Equity method investment impairment




128


Severance and restructuring charges


36




Changes in assets and liabilities





Receivables, net


(633)



(498)


Contract assets


(1,880)



(727)


Inventories


426



98


Accounts payable


743



191


Contract liabilities


(166)



427


Postretirement benefit plans


(133)



(77)


Income taxes


33



473


Other, net


141



415


Net cash provided by operating activities


3,016



4,496







Investing activities





Capital expenditures


(599)



(636)


Other, net


210



4


Net cash used for investing activities


(389)



(632)







Financing activities





Dividends paid


(1,460)



(1,364)


Repurchases of common stock


(1,500)



(1,015)


Issuance of long-term debt, net of related costs




1,131


Repayments of current and long-term debt




(1,150)


Other, net


(82)



(125)


Net cash used for financing activities


(3,042)



(2,523)







Net change in cash and cash equivalents


(415)



1,341


Cash and cash equivalents at beginning of period


3,160



1,514


Cash and cash equivalents at end of period


$

2,745



$

2,855







 

Lockheed Martin Corporation

Consolidated Statement of Equity

(unaudited; in millions)





Common

Stock


Additional

Paid-in

Capital


Retained

Earnings


Accumulated

Other

Comprehensive

Loss


Total

Stockholders'

Equity


Noncontrolling

Interests

in Subsidiary


Total

Equity


Balance at Dec. 31, 2020


$

279



$

221



$

21,636



$

(16,121)



$

6,015



$

23



$

6,038



Net earnings






3,652





3,652





3,652



Other comprehensive income, net of tax1








284



284





284



Dividends declared2






(2,179)





(2,179)





(2,179)



Repurchases of common stock


(4)



(348)



(1,148)





(1,500)





(1,500)



Stock-based awards, ESOP activity and other


1



249







250





250



Net decrease in noncontrolling interests in subsidiary












(15)



(15)



Balance at June 27, 2021


$

276



$

122



$

21,961



$

(15,837)



$

6,522



$

8



$

6,530


















1

Primarily represents the reclassification adjustment for the recognition of prior period amounts related to pension and other postretirement benefit plans.

2

Represents dividends of $2.60 per share declared for each of the first, second and third quarters of 2021. In the second quarter, the company declared the second and third quarter dividends. However, the third quarter dividend will be paid in Sept. 2021.

 

Lockheed Martin Corporation

Other Financial and Operating Information

(unaudited; in millions, except for aircraft deliveries and weeks)



Backlog


June 27,
2021


Dec. 31,

2020


Aeronautics


$

50,296



$

56,551



Missiles and Fire Control


29,285



29,183



Rotary and Mission Systems


35,329



36,249



Space


26,754



25,148



Total backlog


$

141,664



$

147,131















Quarters Ended


Six Months Ended


Aircraft Deliveries


June 27,
2021


June 28,
2020


June 27,

2021


June 28,

2020


F-35


37



25



54



47



C-130J


6



5



8



8



Government helicopter programs


20



16



35



29



Commercial helicopter programs






1





International military helicopter programs


7



2



8



4





Number of Weeks in Reporting Period1


2021


2020


First quarter


12



13



Second quarter


13



13



Third quarter


13



13



Fourth quarter


14



13








1

The company closes its books and records on the last Sunday of each month, except for the month of December, as our fiscal year ends on
Dec. 31. As a result, quarters are typically 13 weeks in length but the number of weeks in a reporting period may vary slightly during the year
and for comparable prior year periods.

 

Cision View original content:https://www.prnewswire.com/news-releases/lockheed-martin-reports-second-quarter-2021-results-301340625.html

SOURCE Lockheed Martin

Copyright 2021 PR Newswire

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