Lockheed Martin Q4 Earnings Miss Expectations, Classified Program Losses Weigh on Results

Lockheed Martin Q4 Earnings Miss Expectations, Classified Program Losses Weigh on Results

Lockheed Martin (LMT) reported disappointing Q4 earnings for 2024, with revenue falling slightly short of expectations. The company posted a revenue of $18.62 billion, below the estimated $18.90 billion, marking a decline of 1.3% compared to the same quarter last year. Earnings per share (EPS) were also significantly lower at $2.22, well below the estimated $6.63, primarily due to losses from classified programs. Free cash flow dropped sharply by 74% year-over-year to $441 million, far below the expected $1.4 billion.

For 2025, Lockheed Martin expects revenue to fall between $73.75 billion and $74.75 billion, just shy of the $74.02 billion estimate. EPS is projected to be between $27.00 and $27.30, again lower than the $27.97 estimate. However, the company expects a recovery in free cash flow, with guidance ranging from $6.6 billion to $6.8 billion.

Looking at the company’s key segments for Q4:

Aeronautics saw a 5% YoY increase in revenue to $8.01 billion, driven by higher production and sustainment volumes of the F-35. However, operating profit dropped by 43% to $434 million due to losses from classified programs.

Missiles and Fire Control experienced an 8% increase in revenue to $3.41 billion but reported a significant operating loss of $804 million due to impacts from $1.3 billion in classified program losses.

Rotary and Mission Systems had a revenue decline of 10% YoY to $4.26 billion. While operating profit remained flat at $513 million, sales were hurt by lower demand for the Seahawk and Combat Rescue Helicopter programs, though radar and C6ISR programs saw higher volumes.

Space also struggled, with a 13% revenue decline to $2.94 billion and a drop in operating profit by 8% to $283 million. The decline was driven by reduced volumes in Next Gen OPIR and classified programs.

For the full year of 2024, Lockheed Martin posted a revenue increase of 5%, reaching $71.0 billion, just below the expected $71.21 billion. EPS dropped by 19% to $22.31, falling short of the $27.99 estimate, while free cash flow decreased by 15% to $5.3 billion. Despite these declines, the company ended the year with a record backlog of $176.0 billion, signaling strong future demand.

CEO Jim Taiclet emphasized the strong demand and the company’s commitment to advancing air power solutions and integrating next-gen technology. However, he acknowledged the significant impact of classified program losses on their financial results.

In terms of shareholder returns, Lockheed Martin returned $6.8 billion in 2024 through dividends and stock buybacks. Pension contributions of $990 million also impacted free cash flow.

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