With the final Q4 period last year beating analyst forecasts and despite FY22 net sales of $66bn for the FY22 being down a touch compared to $67bn reported for FY21 and FY22 net earnings of $5.7 billion – $21.66 per share – being reported by the Bethesda, Maryland based global defence company compared to the $6.3 billion ($22.76 per share) reported for FY21, Lockheed Martin performance last year was nothing if not solid and resilient. FY23 guidance remains unchanged.
Despite further strengthening of the order book taking the backlog to new record levels and a generally solid performance put in from most divisional activities, 2022 can hardly be described as anything other than having been a difficult year for Lockheed Martin – just as it also has been for many other large industrial companies across the US and the world.
Supply issues, higher costs and inflation all played a part but for all that, even if they could by past standards be described as unspectacular look deeper and one can see that these are in reality an excellent set of full year results.
FY22 earnings included some non-operational items of $1.9 billion, or $5.57 per share, compared to $1.4 billion, or $3.99 per share in FY21. Cash from operations in FY22 was $7.8 billion, compared to $9.2 billion FY21 and Free Cash Flow for FY22 was $6.1 billion, compared to $7.7 billion for FY21.
Speaking after the Q4 and FY22 results were delivered, Lockheed Martin Chairman, President and CEO James Taiclet said that a “stronger than expected finish to the year demonstrated the company’s reliability and resiliency to meet commitments in challenging environments, while leading the industry’s critical security advancements for our nation and allies” adding that “Our ongoing expansion of 21st Century capabilities and commercial partnerships are delivering deterrence solutions and value enhancing growth opportunities across our businesses. As we track toward our objective of growth resumption in 2024, we will continue to execute our dynamic and disciplined capital allocation program, by reinvesting in our business and pursuing growth opportunities, and returning capital to shareholders. We remain confident in our plans to enable our customers to stay ahead of ready and to deliver sustainable economic value.”
Separately, the company acknowledged that it faced a challenging environment with geopolitical events that showed how important its technologies are to the security of Europe, NATO and their allies and that in order to meet emerging challenges, it has increased Independent Research and Development and capital investments to help accelerate the delivery of capabilities its customers need.
These results were, despite flat performance in some divisional activities, certainly resilient and it is worth noting that Lockheed Martin also returned $10.9 billion to shareholders through dividends of $3.0 billion combined with share repurchases of $7.9 billion. The Dividend was increased by 7% making this the twenty first consecutive year of increases.
Lockheed Martin’s current large range of defence, aeronautics and space programmes are delivering not only to the U.S. government but increasingly to a growing number of allied nations. This has been reflected in another year of record orders with the order backlog increasing by 11% to $150 billion compared to that of the fourth quarter FY21.
Always looking ahead and placing considerable efforts and investment in the design of new technologies, during the past year the company has brought new technologies such as 5G.MIL®, artificial intelligence, and distributed cloud computing into various of its platforms and systems. Trust and building long term relationships with its customers is crucial to a company such as Lockheed Martin and through the past year these have been further strengthened through collaborative experimentation and demonstrations. In addition, a number of new strategic relationships were announced with some of the world’s leading commercial technology companies, including Intel, Microsoft, and IBM’s Red Hat.
With solid performances across Lockheed Martin’s global business, many significant programme milestones were also achieved during the fourth quarter. These included:
Aeronautics having finalised a contract with the F-35 Joint Program Office for the production and delivery for up to 398 F-35s for $30 billion, including U.S., international partners and Foreign Military Sales (FMS) aircraft. The agreement includes the first F-35 aircraft for Belgium, Finland, and Poland.
Missiles & Fire Control, together with the U.S. Air Force, successfully conducted the first All-Up Round hypersonic flight test for the Air-launched Rapid Response Weapon (ARRW), enabling a hypersonic future for LM customer in order to maintain potential advantage against adversaries.
The U.S. Navy declared full-rate production of the Rotary & Mission Systems Sikorsky CH-53K® helicopter, a decision which is expected to increase production to more than 20 helicopters annually in the coming years. This decision installs confidence in the diverse network of more than 200 CH‑53K suppliers across 34 states and stabilises Sikorsky’s domestic supply chain, allowing suppliers to purchase in bulk and creating efficiencies to drive down overall costs for the U.S. military and international allies.
During a nearly 26-day mission, Orion travelled more than 1.4 million miles on a path that took it around and beyond the moon before returning to Earth on Dec. 11. The flight testing and data from the mission will inform future Artemis missions. LM’s Space business also announced a new contract on Oct. 20 to deliver three Orion spacecraft missions to NASA for its Artemis VI-VIII missions, continuing the delivery of exploration vehicles to the agency to carry astronauts into deep space and around the moon supporting the Artemis program.
CHW (London – 24th January 2023)
Howard Wheeldon FRAeS
Wheeldon Strategic Advisory Ltd,
M: +44 7710 779785
Skype: chwheeldon
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