Lockheed Martin Posted Muted Quarterly Results but Beefed Up Yearend Outlook

U.S.’s earnings reporting season is gaining momentum. Lockheed Martin (LMT) yesterday announced its Q1 2022 financial results. Lockheed Martin slid 2.3% premarket after reporting its Q1 adjusted earnings beat estimates but revenues came in more than $500 million short of expectations, hurt by supply chain issues (read below) linked to Covid-19.

Let’s remind that Lockheed Martin is a defense sector blue chip, an American military-industrial corporation specializing in aircraft manufacturing, aerospace engineering, shipbuilding, postal services automation, airport infrastructure and logistics. The company was founded in 1995 and is headquartered in Maryland, USA. Let's look at the results of the company's work (compared to the 1st quarter of 2021).

Q1 net income slipped to $1.73 billion, or $6.44/share, from $1.84 billion, or $6.56/share, in the year-earlier quarter, as sales fell 8% to $14.96 billion and operating profit slid 11% to $1.93 billion while free cash flow was $1.1 billion in Q1 2022, compared to $1.5 billion in Q1 2021.

Meanwhile, to date of all segments, only Aeronautics posted an improved YoY revenue ($6.401 million vs. $6.387 million). Q1 sales by segment: Aeronautics +0.2% YoY to $6.4 billion, Rotary and Mission Systems -14% to $3.55 billion, Space -15% to $2.56 million, while Missiles and Fire Control dropped 11% to $2.45 billion.

Having said that, net income of $1.7 billion, or $6.44 per share came in better-than-expected. Cash from operations accounted for $1.4 billion while free cashflow reached $1.1 billion. Cash payable back to shareholders of $2.8 billion represented by share repurchases and dividends. The company confirmed its guidance for 2022.

All in all, LMT’s performance is expected to get an apparently palpable boost from the increased geopolitical tensions and a new U.S. President’s bill authorizing more arms shipments to global warzones including Ukraine.

Conclusion: Lockheed Martin apparently experienced a post-Covid headwind at the start of the year, however, its forward guidance substantially improved down the road making the company capable of delivering margin growth and free cash flow above its own forecast. Still, the company tends to cite the continuing impact from the remaining Covid restrictions, as well as various supply chain issues. The company remains confident in its guidance for the rest of the year and further growth prospects, despite this quarter's global developments in terms of a sharp pivot prompted by new geopolitical developments.