Lockheed Martin [LMT] on Tuesday posted flat earnings and a scant decline in sales in the fourth quarter, but the results were better than the company had forecast, leading to strong overall results in 2023.
Net income in the quarter was $1.9 billion, $7.58 earnings per share (EPS), versus $1.9 billion ($7.40 EPS) a year ago. The results were negatively impacted by a $73 million (30 cents EPS) after-tax charge related to severance and asset impairments. Per share results were higher on a lower share count and topped consensus estimates by 49 cent per share.
Sales in the quarter exceeded $18.9 billion, down less than a percent from $19 billion a year ago.
At the operating level, segment profit was down a percent to just over $2 billion from just under $2.1 billion a year ago. Space was the only segment reporting higher operating income, up due to national security space and classified programs.
The company reported a higher operating profit on classified programs at the Aeronautics segment and a $45 million loss on a classified program at the Missiles and Fire Control (MFC) segment.
In 2023, sales increased more than 2 percent to $67.6 billion from $66 billion in 2022, about $2 billion higher than the company had expected a year ago, Jay Malave, Lockheed Martin’s chief financial officer, said during the company’s earnings call.
The growth was driven by the Space segment, followed by Aeronautics, and Rotary and Mission Systems.
Net income in 2023 was $6.9 billion ($27.55 EPS), up 21 percent from $5.7 billion ($21.66 EPS) a year ago despite a percent drop in segment profits, which were higher than Lockheed Martin expected due to the improved sales.
In 2024, sales are expected to grow to between $68.5 billion and $70 billion, representing 2.5 percent growth at the mid-point of the range. Earnings are forecast to range between $25.65 EPS and $26.35 EPS, down versus 2023 on pension headwinds, higher taxes and interest rate expense, and losses from two production lots in the classified program at MFC.
Free cash flow in the quarter was $1.7 billion and for 2023 $6.2 billion. In 2024, Lockheed Martin expects free cash flow between $6 billion and $6.3 billion. Backlog at the end of 2023 stood at a record $160.6 billion, up 7 percent from $150 billion at the end of 2022.
The financial outlook assumes that fiscal year 2024 federal appropriations bills will be enacted by March consistent with the Biden administration’s budget request. The guidance also assumes that deliveries of F-35 fighter aircraft, which have largely been halted since late 2023, will resume in the second half of the year with the current expectation of between 75 and 110 aircraft being accepted by the Defense Department.