PR Newswire
BETHESDA, Md., April 20, 2021
BETHESDA, Md., April 20, 2021 /PRNewswire/ -- Lockheed Martin Corporation [NYSE: LMT] today reported first quarter 2021 net sales of $16.3 billion, compared to $15.7 billion in the first quarter of 2020. Net earnings in the first quarter of 2021 were $1.8 billion, or $6.56 per share, compared to $1.7 billion, or $6.08 per share, in the first quarter of 2020. Cash from operations in the first quarter of 2021 was $1.7 billion, compared to $2.3 billion in the first quarter of 2020.
"Lockheed Martin continues to deliver vital next generation technologies that will help keep our nation and its allies safe, and advance space exploration, while providing long-term value for the U.S. taxpayers and our shareholders," said Lockheed Martin Chairman, President and CEO James Taiclet. "Our strong financial results position us to continue advancing 21st Century innovations that will deter the threats of the future, while remaining a trusted partner for customers who depend on our existing platforms and services today. The men and women of Lockheed Martin have managed the challenges of COVID-19 to maintain operations safely. As we look ahead to a new and better normal, our workforce is focused on growth, ready to strengthen our foundation well into the future."
First quarter 2021 net earnings included unrealized gains from investments held in the Lockheed Martin Ventures Fund of $68 million ($51 million, or $0.18 per share, after-tax) and severance and restructuring charges of $36 million ($28 million, or $0.10 per share, after-tax). As previously announced, the severance and restructuring charges are to close and consolidate certain facilities and reduce total workforce within the Rotary and Mission Systems (RMS) business segment. The actions are being taken to better align RMS' organization and cost structure to improve the efficiency of its operations and affordability of its products and services.
Summary Financial Results
The following table presents the corporation's summary financial results.
| (in millions, except per share data) | | Quarters Ended1 | | ||||||
| | | March 28, 2021 | | March 29, 2020 | | ||||
| Net sales | | $ | 16,258 | | | $ | 15,651 | | |
| | | | | | | ||||
| Business segment operating profit2 | | $ | 1,749 | | | $ | 1,725 | | |
| Unallocated items | | | | | | ||||
| FAS/CAS operating adjustment | | 489 | | | 469 | | | ||
| Severance and restructuring charges3 | | (36) | | | — | | | ||
| Other, net4 | | (20) | | | (72) | | | ||
| Total unallocated items | | 433 | | | 397 | | | ||
| Consolidated operating profit | | $ | 2,182 | | | $ | 2,122 | | |
| | | | | | | ||||
| Net earnings5 | | $ | 1,837 | | | $ | 1,717 | | |
| | | | | | | ||||
| Diluted earnings per share | | $ | 6.56 | | | $ | 6.08 | | |
| | | | | | | ||||
| Cash from operations6 | | $ | 1,748 | | | $ | 2,314 | | |
| | | | | | | ||||
1 | The corporation closes its books and records on the last Sunday of the calendar quarter to align its financial closing with its business processes, which was on March 28 for the first quarter of 2021 and March 29 for the first quarter of 2020. The consolidated financial statements and tables of financial information included herein are labeled based on that convention. This practice only affects interim periods, as the corporation's fiscal year ends on Dec. 31. | | ||||||||
2 | Business segment operating profit is a non-GAAP measure. See the "Non-GAAP Financial Measures" section of this news release for more information. | | ||||||||
3 | In the first quarter of 2021, the corporation recognized severance and restructuring charges of $36 million ($28 million, or $0.10 per share, after-tax) at its Rotary and Mission Systems (RMS) business segment. | | ||||||||
4 | In the first quarter of 2021 and 2020, the corporation recognized $10 million ($8 million, or $0.03 per share, after-tax) and $48 million ($36 million, or $0.13 per share, after-tax) in losses due to market declines that reduced the fair market value of certain investments held in a trust for our deferred compensation plans. | | ||||||||
5 | In the first quarter of 2021, the corporation recognized unrealized gains from investments held in the Lockheed Martin Ventures Fund of $68 million ($51 million, or $0.18 per share, after-tax). | | ||||||||
6 | Cash from operations in the first quarter of 2021 reflects the receipt of approximately $50 million of net accelerated progress payments due to the U.S. Government's increase in the progress payment rate from 80% to 90% compared to none in the first quarter of 2020. The corporation used the accelerated progress payments from the U.S. Government plus cash on hand to accelerate $1.4 billion of payments to suppliers in the first quarter of 2021 compared to $50 million in the first quarter of 2020. | |
2021 Financial Outlook
The following table and other sections of this news release contain forward-looking statements, which are based on the corporation's current expectations. Actual results may differ materially from those projected. It is the corporation's practice not to incorporate adjustments into its financial outlook for proposed acquisitions, divestitures, ventures, changes in law, or new accounting standards until such items have been consummated, enacted or adopted. For additional factors that may impact the corporation's actual results, refer to the "Forward-Looking Statements" section in this news release.
| (in millions, except per share data) | | Current Guidance1,3 | | January 2021 Outlook1 | |
| | | | | | |
| Net sales | | $67,300 - $68,700 | | $67,100 - $68,500 | |
| | | | | | |
| Business segment operating profit | | $7,380 - $7,520 | | $7,355 - $7,495 | |
| | | | | | |
| Net FAS/CAS pension adjustment2 | | ~$2,330 | | ~$2,330 | |
| | | | | | |
| Diluted earnings per share | | $26.40 - $26.70 | | $26.00 - $26.30 | |
| | | | | | |
| Cash from operations | | ≥$8,900 | | ≥$8,300 | |
| | | | | | |
1 | The corporation's 2021 financial outlook reflects the anticipated impacts from the COVID-19 pandemic based on the corporation's understanding at the time of this news release. However, the ultimate impacts of COVID-19 on the corporation's financial outlook for 2021 and beyond remains uncertain and there can be no assurance that the corporation's underlying assumptions are correct. Additionally, the 2021 financial outlook reflects the UK Ministry of Defense's intent to re-nationalize the Atomic Weapons Establishment program on June 30, 2021. The 2021 financial outlook also reflects the impact of the first quarter 2021 unrealized gains from investments held by the Lockheed Martin Ventures Fund, but does not include any future gains or losses related to market volatility and changes in valuations of our investment holdings. Further, the 2021 financial outlook does not incorporate the pending acquisition of Aerojet Rocketdyne Holdings, Inc. previously announced on Dec. 20, 2020. | | ||||
2 | The net FAS/CAS pension adjustment is presented as a single amount and includes total expected U.S. Government cost accounting standards (CAS) pension cost of approximately $2,065 million and total expected financial accounting standards (FAS) pension income of approximately $265 million. CAS pension cost and the service cost component of FAS pension expense are included in operating profit. The non-service cost components of FAS pension expense are included in non-operating income. For additional detail regarding the pension amounts reported in operating and non-operating results, refer to the supplemental table included at the end of this news release. | | ||||
3 | On March 11, 2021, the President signed the American Rescue Plan Act of 2021 into law. This legislation contained provisions that affected single-employer pension plans, and impacts associated with the legislation have been included in the current guidance above. | | ||||
| | |
Cash Activities
The corporation's cash activities in the first quarter of 2021, included the following:
Segment Results
The corporation operates in four business segments organized based on the nature of products and services offered: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space. The following table presents summary operating results of the corporation's business segments and reconciles these amounts to the corporation's consolidated financial results.
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