Lockheed Martin expects growth to return in 2024


Lockheed Martin executives said there’s additional interest in the Sikorsky CH-53K King Stallion heavy-lift cargo helicopter, which will help ramp up Lockheed’s business and sales in 2024. Sikorsky Photo

Aerospace defense company Lockheed Martin is expecting its sales to rebound in 2024, citing the residual impacts from the pandemic and continued supply chain challenges as reasons for its long-term outlook.

“We now expect to return to growth in 2024, with 2023 sales being approximately equal to our 2022 outlook,” James Taiclet, Lockheed Martin’s chair, president and CEO, told investors during the company’s third-quarter earnings call on Oct. 18.

Specifically, Lockheed executives said its programs of record and classified business are two areas that will “ramp up from 2023 to 2024.”

Taiclet said with more F-35 fighter aircraft flying globally, there will be more sustainment work required for the company. And as the impacts from the pandemic and supply chain challenges subside, Lockheed believes it can carry out a steady production rate of 156 aircraft a year starting in 2024

“Similarly, the CH-53K is going to move up the production rate significantly, and there’s some additional international interest there,” Taiclet said. “That aircraft can do lift capability that far exceeds any other that’s ever been built in history, and it’s going to get even more uptake as time goes on.”

Jay Malave, Lockheed’s chief financial officer, added that the company expects to experience accelerated growth in its F-16 program in 2024, assuming Lockheed sees improvements from the impact of COVID-19 and supply chain disruptions. “That’s 15 months from now for improvement that we expect to occur,” Malave said.

As the company waits for its expected growth to return in 2024, Lockheed executives said the company’s strong financial position has allowed it to “aggressively” return cash to shareholders.

Lockheed reported $2.7 billion in free cash flow in the third quarter of 2022, enabling the company to return $2.1 billion, or about 76%, of its free cash flow back to shareholders through share repurchases and dividends in the third quarter.

On Oct. 17, Lockheed’s board authorized the purchase of up to an additional $14 billion of common stocks under its share repurchase program, which will be funded through a combination of cash on hand and the issuance of debt. Lockheed expects to execute a $4-billion accelerated share repurchase program in the fourth quarter of this year, bringing its total share repurchases in 2022 to $8 billion. The rest of the repurchase program authorization is expected to be utilized over a three-year period.

Lockheed also decided in September to increase its quarterly dividend by seven percent to $3 a share, beginning with the dividend payment in the fourth quarter of this year.

“Altogether, we’re on track to deliver approximately $11 billion to shareholders in 2022,” Taiclet said. “We are also elevating our commitment to drive long-term growth through strong, independent research and development, and capital expenditure funding with an expected total of nearly $4 billion in 2023.”

Executives said the company’s strong financial performance will enable it to further invest in security technologies for its customers, such as hypersonics, directed energy, autonomy, and 5G.MIL digital capabilities.  

The company reported net sales of $16.6 billion in the third quarter of 2022 — an increase from $16 billion reported during the same period last year. Its net earnings reached $1.8 billion in the third quarter of this year compared to $614 million in 2021, and the company reported $3.1 billion in cash from operations in the third quarter compared to $1.9 billion in the same period last year.

  
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