The chart attached above provides a breakdown of Lockheed Martin revenue by segment. They are a global security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products and services. They also provide a broad range of management, engineering, technical, scientific, logistics, system integration and cybersecurity services. They serve both U.S. and international customers with products and services that have defense, civil and commercial applications, with their principal customers being agencies of the U.S. Government.
In 2017, 69% of their $51.0 billion in net sales were from the U.S. Government, either as a prime contractor or as a subcontractor (including 58% from the Department of Defense (DoD)), 30% were from international customers (including foreign military sales (FMS) contracted through the U.S. Government) and 1% were from U.S. commercial and other customers. Their main areas of focus are in defense, space, intelligence, homeland security and information technology, including cybersecurity.
They operate in an environment characterized by both increasing complexity in global security and continuing economic pressures in the U.S. and globally. A significant component of their strategy in this environment is to focus on program execution, improving the quality and predictability of the delivery of their products and services, and placing security capability quickly into the hands of their U.S. and international customers at affordable prices. Recognizing that their customers are resource constrained, they are endeavoring to develop and extend their portfolio domestically in a disciplined manner with a focus on adjacent markets close to their core capabilities, as well as growing their international sales. The chart attached above provides a breakdown of Lockheed Martin revenue by segment.
They continue to focus on affordability initiatives. They also expect to continue to invest in technologies to fulfill new mission requirements for their customers and invest in their people so that they have the technical skills necessary to succeed without limiting their ability to return a substantial portion of their free cash flow to their investors in the form of dividends and share repurchases. They define free cash flow as cash from operations as determined under U.S. generally accepted accounting principles (GAAP), less capital expenditures as presented on their consolidated statements of cash flows. The chart attached above provides a breakdown of Lockheed Martin revenue by segment.
Lockheed Martin Revenue By Segment
|Revenue By Segment||Q1 2018|
|Missiles and Fire Control||$1677 million|
|Rotary and Mission Systems||$3223 million|
They operate in four business segments: Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS) and Space, previously known as Space Systems. The chart attached above provides a breakdown of Lockheed Martin revenue by segment. They organize their business segments based on the nature of the products and services offered.
- Aeronautics: Engaged in the research, design, development, manufacture, integration, sustainment, support and upgrade of advanced military aircraft, including combat and air mobility aircraft, unmanned air vehicles and related technologies.
- Missiles and Fire Control– Provides air and missile defense systems; tactical missiles and air-to-ground precision strike weapon systems; logistics; fire control systems; mission operations support, readiness, engineering support and integration services; manned and unmanned ground vehicles; and energy management solutions.
- Rotary and Mission Systems– Provides design, manufacture, service and support for a variety of military and civil helicopters; ship and submarine mission and combat systems; mission systems and sensors for rotary and fixed-wing aircraft; sea and land-based missile defense systems; radar systems; the Littoral Combat Ship; simulation and training services; and unmanned systems and technologies. In addition, RMS supports the needs of customers in cybersecurity and delivers communications and command and control capability through complex mission solutions for defense applications. The 2015 results of the acquired Sikorsky business have been included in their consolidated results of operations from the November 6, 2015 acquisition date through December 31, 2015. Accordingly, the consolidated results of operations for the year ended December 31, 2015 do not reflect a full year of Sikorsky operations.
- Space – Engaged in the research and development, design, engineering and production of satellites, strategic and defensive missile systems and space transportation systems. Space provides network-enabled situational awareness and integrates complex space and ground-based global systems to help their customers gather, analyze and securely distribute critical intelligence data. Space is also responsible for various classified systems and services in support of vital national security systems. Prior to August 24, 2016, the date they obtained control of AWE they accounted for the venture using the equity method of accounting with 33% of AWE’s earnings or losses recognized by Space. Subsequent to August 24, 2016, they obtained control of AWE and 100% of AWE’s sales and 51% of AWE’s earnings have been included in their consolidated results of operations. Accordingly, the consolidated results of operations for the year ended December 31, 2016 do not reflect a full year of AWE operations. Operating profit for their Space business segment also includes their share of earnings for their investment in ULA, which provides expendable launch services to the U.S. Government. The chart attached above provides a breakdown of Lockheed Martin revenue by segment.