Lockheed Martin's Q3 Results Beat Expectations, Reaffirms FY23 Outlook

Lockheed Martin Corp LMT reported third-quarter FY23 net sales growth of 1.8% year-over-year to $16.88 billion, above the consensus of $16.73 billion.

Adjusted EPS of $6.77 (-1.5% Y/Y) topped the consensus of $6.67.

The gross margin contracted 65 bps to 12.13%. The operating profit declined by 5.4% Y/Y to $2.04 billion, and the margin contracted by 92 bps to 12.1%.

Aeronautics sales were $6.72 billion (-5% Y/Y), and the operating margin was 10%, down by 70 bps.

Missiles and Fire Control sales of $2.94 billion (+4% Y/Y); operating margin was flat at 13.5%.

Rotary and Mission Systems sales of $4.12 billion (+9% Y/Y); operating margin 11.7%, down 80 bps.

Space net sales of $3.10 billion (+8% Y/Y); operating margin 8.4%, down by 210 bps.

Lockheed Martin generated cash from operating activities year-to-date was $5.55 billion, compared to $5.87 billion a year ago.

At the end of the quarter, LMT's total backlog was $156.03 billion, an increase of 4.02% from Dec. 31, 2022.

As previously announced on October 6, 2023, the company's board authorized the repurchase of its common stock up to an additional $6.0 billion, increasing the total authorization for potential future common stock repurchases to $13.0 billion.

The company returned $2.5 billion of cash to shareholders through dividends and share repurchases.

On October 6, 2023, the company authorized a fourth-quarter dividend payment of $3.15 per share, representing an increase of $0.15 per share over the prior quarterly dividend payment.

"Our backlog remains robust at $156 billion as both domestic and international orders were strong. Moreover, our 21st Century Security strategy is resulting in new business successes, including the award of the transformational AIR6500 integrated air and missile defense program by the Australian Defence Force, which will serve as a blueprint for future joint all-domain operations worldwide," said Lockheed Martin Chairman, President and CEO Jim Taiclet.

FY23 Outlook, reaffirmed: Lockheed Martin expects net sales of ~$66.25 billion - $66.75 billion versus the consensus of $66.66 billion.

It sees EPS of ~$27.00 - $27.20 versus the consensus of $27.15.

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

Price Action: LMT shares are trading lower by 1.23% at $435.00 premarket on Tuesday.