Lockheed Martin Q2: 8% Revenue Growth, Solid Demand, Raised FY23 Guidance & More

Lockheed Martin Corp LMT reported second-quarter FY23 net sales growth of 8.1% year-over-year to $16.69 billion, above the consensus of $15.91 billion.

Adjusted EPS of $6.73 (+6.5% Y/Y) topped the consensus of $6.45.

The gross margin contracted 14 bps to 12.5%. The operating profit increased by 8.8% Y/Y to $2.14 billion, and the margin expanded by 10 bps to 12.7%.

Aeronautics sales were $6.87 billion (+17% Y/Y), and the operating margin was 10.4%, down by 10 bps.

Missiles and Fire Control sales of $2.76 billion (+0.3% Y/Y); operating margin 13.5%, contracted by 170 bps.

Rotary and Mission Systems sales of $3.89 billion (-3% Y/Y); operating margin 11.6%, up 10 bps.

Space net sales of $3.17 billion (+12% Y/Y); operating margin 9.9%, down by 30 bps.

Lockheed Martin generated cash from operating activities year-to-date was $2.66 billion, compared to $2.74 billion a year ago. Free cash flow YTD was $2.04 billion, compared to $2.17 billion in 2Q22.

At the end of the quarter, LMT’s total backlog was $158.01 billion, an increase of 5.3% from Dec. 31, 2022.

The company returned $1.5 billion of cash to shareholders through dividends and share repurchases during the quarter.

“Given the strength of our year-to-date results and ongoing demand for our signature programs and advanced technologies, we are raising our full year sales and earnings per share outlooks for 2023. We are confident in our return to growth and ability to reward our shareholders over the long run with reliable free cash flow per share expansion and cash deployment,” commented Lockheed Martin Chairman, President, and CEO Jim Taiclet.

FY23 Outlook, raised: Lockheed Martin expects net sales of ~$66.25 billion - $66.75 billion (prior view $65 billion -$66 billion) versus the consensus of $65.84 billion. 

It sees EPS of ~$27.00 - $27.20 (prior view ~$26.60-$26.90) versus the consensus of $27.15.

The company sees Business segment operating profit of $7.325 billion - $7.375 billion (prior $7.255 billion - $7.355 billion), cash from operations of ~$8.15 billion, and free cash flow of ~$6.2 billion.

Price Action: LMT shares are trading higher by 1.06% at $474.94 premarket on Tuesday.