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How Lockheed Martin Makes Money

Lockheed Martin's largest revenue source is its Aeronautics business.

Lockheed Martin Corp. (LMT) is a global security and aerospace company engaged in the research, design, development, manufacturing, integration and sustainment of advanced technology systems, products, and services. The company also provides management, engineering, cybersecurity, and a range of other services. It operates through four main business segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.

Lockheed competes both in the U.S. and internationally. Some of its big-name competitors include aircraft manufacturer Boeing Co. (BA), defense firm Raytheon Co. (RTX), defense and aerospace company BAE Systems Inc., and global defense company Northrop Grumman Corp. (NOC).

Key Takeaways

  • Lockheed Martin provides advanced technology systems, products, and services related to the aerospace and defense industry.
  • The biggest share of Lockheed's sales comes from the aeronautics business.
  • The company recently announced the termination of its previous agreement to purchase Aerojet Rocketdyne Holdings Inc. due to an FTC lawsuit aimed at blocking the transaction.
  • Lockheed Martin announced in early February the appointment of Jesus Malave to the role of CFO.

Lockheed Martin's Financials

Lockheed Martin reported in late January 2022 financial results for Q4 of its 2021 fiscal year (FY), the three-month period ended Dec. 31, 2021. Net income was $2.0 billion, up 14.3% compared to the year-ago quarter. Revenue grew 4.1% year over year (YOY) to $17.7 billion. The company's operating profit, which it uses as a profitability metric for its individual business segments, rose 7.3% YOY to $2.5 billion.

Lockheed Martin said that its net income in the fourth quarter was boosted by net gains of $85 million ($64 million after taxes) due to increases in the fair value of investments held in the company's Lockheed Martin Venture Fund. The company said that it achieved solid growth in sales, segment operating profit, and earnings per share (EPS) during the quarter.

Lockheed Martin's Business Segments

Lockheed Martin operates four main business segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space. The company breaks down its revenue and operating income in the four main segments below. Total business segment operating profit in Q4 FY 2021 was $2.0 billion. The difference between this figure and the company's consolidated operating profit mentioned above is due to certain items that are not allocated to any of the individual business segments below.

Aeronautics

Lockheed's Aeronautics business engages in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, unmanned air vehicles, and related technologies.

The Aeronautics segment posted $7.1 billion in revenue and $820 million in operating profit in Q4 FY 2021, comprising about 40% of the company's total revenue and 41% of its total business segment operating profit. The segment's revenue grew by 6.2% YOY while its operating income rose 12.8% YOY.

Missiles and Fire Control

Lockheed's Missiles and Fire Control business offers a diverse range of products and services, including air and missile defense systems, logistics, fire control systems, mission operations support, engineering support and integration services, manned and unmanned ground vehicles, energy management solutions, and more.

The segment posted $3.2 billion in revenue and $438 million in operating income in Q4 FY 2021, comprising 18% of the company's total revenue and 22% of its total business segment operating profit. The segment's revenue grew by 12.3% YOY in Q4. Operating income rose 17.1% YOY during the quarter.

Rotary and Mission Systems

Lockheed's Rotary and Mission Systems business provides design, manufacture, service, and support for areas such as military and commercial helicopters, surface ships, sea and land-based missile defense systems, radar systems, simulation and training solutions, cybersecurity, and more.

The segment posted $4.5 billion in revenue and $448 million in operating profit in Q4 FY 2021, comprising 25% of the company's total revenue and 22% of its total operating profit. The segment's revenue grew by 5.9% YOY as its operating income rose 10.3% YOY during the quarter.

Space

Lockheed's Space business engages in a broad range of activities including the development and production of satellites, space transportation systems, and defensive systems. The segment is also responsible for various classified systems and services in support of vital national security systems.

The Space segment posted $2.9 billion in revenue and $308 million in operating income in Q4 FY 2021, comprising 16% of the company's total revenue and 15% of total operating profit. Revenue fell 9.8% YOY while operating income declined 16.3% YOY in the fourth quarter.

Lockheed Martin's Recent Developments

On Feb. 13, 2022, Lockheed Martin announced it was terminating its previous agreement to acquire Aerojet Rocketdyne Holdings Inc. due to the U.S. Federal Trade Commission's (FTC) lawsuit to block the merger.

On Feb. 1, 2022, Lockheed Martin announced the appointment of Jesus "Jay" Malave to the role of chief financial officer (CFO), effective immediately. Prior to his appointment, Malave served as vice president and CFO of Carrier Corp., one of United Technologies Corp.'s operating units. He replaces interim CFO John Mollard, who will continue as vice president and treasurer.

How Lockheed Martin Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Lockheed Martin and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Lockheed Martin releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Lockheed Martin discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Lockheed Martin breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Lockheed Martin Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors   ✔ (U.S. Only)       
C-Suite          
General Management ✔ (U.S. Only)  ✔ (U.S. Only)  ✔ (U.S. Only)  ✔ (U.S. Only)   
Employees ✔ (U.S. Only)      ✔ (U.S. Only)   

Article Sources

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  1. Lockheed Martin Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 3. Accessed Feb. 14, 2022.

  2. Lockheed Martin Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 8. Accessed Feb. 14, 2022.

  3. Lockheed Martin Corp. "Form 8-K dated Jan. 25, 2022," Page 3. Accessed Feb. 14, 2022.

  4. Lockheed Martin Corp. "Form 8-K dated Jan. 25, 2022," Page 1. Accessed Feb. 14, 2022.

  5. Lockheed Martin Corp. "Form 8-K dated Jan. 25, 2022," Page 6. Accessed Feb. 14, 2022.

  6. Lockheed Martin Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 45. Accessed Feb. 14, 2022.

  7. Lockheed Martin Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 46. Accessed Feb. 14, 2022.

  8. Lockheed Martin Corp. "Form 10-K for the fiscal year ended December 31, 2021," Page 47. Accessed Feb. 14, 2022.

  9. Lockheed Martin. "Lockheed Martin Terminates Agreement To Acquire Aerojet Rocketdyne." Accessed Feb. 14, 2022.

  10. Lockheed Martin Corp. "Lockheed Martin Names Jay Malave As Chief Financial Officer." Accessed Feb. 14, 2022.

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