Lockheed Martin Raises Annual EPS Guidance But Struggles With Sales; Stock Slips

Lockheed Martin Corp LMT shares are trading lower after the company reported mixed third-quarter results.

The company reported net sales growth of 1.3% year-over-year to $17.104 billion, missing the consensus of $17.351 billion. Adjusted EPS of $6.84, up from $6.77 in the prior year, topped the consensus of $6.50.

The gross margin expanded 24 bps to 12.4%. The operating profit was $2.14 billion, and the margin increased by 41 bps to 12.5%.

Aeronautics sales were $6.487 billion (-3% YoY), and the operating margin was 10.2%, up from 10% YoY. Missiles and Fire Control sales of $3.175 billion (+8% YoY); operating margin was 14.4%, up from 13.5% YoY.

Rotary and Mission Systems sales of $4.367 billion (+6% YoY); operating margin 11.1%, down 60 bps. Space net sales of $3.075 billion (-1% YoY); operating margin 8.8%, up 40 bps.

Lockheed Martin generated operating cash flow for the nine months of $5.949 billion, compared to $5.555 billion a year ago.

At the end of the quarter, LMT’s total backlog was $165.693 billion, an increase of 3.1% from December 31, 2023. LMT returned $1.6 billion of cash to shareholders through dividends and share repurchases during the quarter.

Also Read: Lockheed Martin Shares Are Rising In Tuesday Pre-Market: What’s Going On?

Dividend: Recently, LMT declared a fourth-quarter dividend payment of $3.30 per share, representing an increase of $0.15 per share over the prior quarterly dividend payment. Payable on December 27 to holders of record as of the close of business on December 2.

Also on October 2, the company’s board authorized the repurchase of its common stock up to an additional $3.0 billion, increasing the total authorization for potential future common stock repurchases to $10.3 billion.

“As a result of our strong year-to-date results and confidence in our near-term performance, we are raising the outlook for full year 2024 sales, segment operating profit, EPS and free cash flow,” commented Lockheed Martin Chairman, President, and CEO Jim Taiclet.

“Looking forward, we continue to make progress on the three key initiatives of our 21st Century Security strategy of strengthening the resiliency and scalability of our production system, accelerating cutting edge digital and physical technologies into all our mission solutions and our internal operations, and expanding international partnerships to broaden our production capacity and drive more international sales,” added Taiclet.

FY24 Outlook, revised: Lockheed Martin narrows sales guidance from the $70.50 billion – $71.50 billion range to ~$71.25 billion versus the consensus of $71.05 billion.

LMT raises EPS guidance to ~$26.65 from $26.10 – $26.60, versus the consensus of $26.38.

The company now sees Business segment operating profit of $7.475 billion (prior $7.35 billion – $7.50 billion), cash from operations of $7.95 billion (prior $7.75 billion – $8.05 billion), and free cash flow of $6.2 billion (prior $6 billion – $6.3 billion).

Price Action: LMT shares are trading lower by 4.91% at $584.45 at the last check Tuesday.

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