How Lockheed Martin Makes Money: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space

Lockheed Martin Corp. (LMT) is a global security and aerospace company engaged in 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. (RTN), defense and aerospace company BAE Systems Inc., and global defense company Northrop Grumman Corp. (NOC).

Lockheed Martin’s Financials

Lockheed Martin posted net income of $6.8 billion on $65.4 billion of revenue during its 2020 fiscal year (ended December 31, 2020) for a net profit margin of 10.4%. As much as 75%, or $49.0 billion, of revenue originated domestically. The remaining 25% came from other regions across the globe, including Asia Pacific (8%), Europe (10%), the Middle East (6%), and Other (1%). The U.S. government is the company’s biggest client, accounting for 74%, or $48.5 billion, of total revenue.

Net income grew 9.7% in 2020 while revenue rose 9.3%. Lockheed Martin noted that favorable contract award timing, strong operational performance, and lower travel and overhead expenditures due to the COVID-19 pandemic helped to partially offset the negative impacts of the pandemic on its financial results for the year.

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.

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 $26.3 billion in revenue and $2.8 billion in operating profit in 2020, comprising about 40% of the company’s total revenue and 40% of its total business segment operating profit of $7.2 billion. The segment’s revenue grew by 10.9% while its operating income rose 12.8% during the year.

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 $11.3 billion in revenue and $1.5 billion in operating income in 2020, comprising 17% of the company’s total revenue and 22% of its total operating profit. The segment’s revenue grew by 11.1% in 2020. Operating income rose 7.2% during the year.

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 $16.0 billion in revenue and $1.6 billion in operating profit in 2020, comprising 24% of the company’s total revenue and 23% of its total operating profit. The segment’s revenue grew by 5.7% as its operating income rose 13.7% during the year.

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 $11.9 billion in revenue and $1.1 billion in operating income in 2020, comprising 18% of the company’s total revenue and 16% of total operating profit. Despite revenue growth of 9.4%, operating income fell 3.5% in 2020.

Lockheed Martin’s Recent Developments

On December 20, 2020, Lockheed Martin announced that it had entered into an agreement to acquire Aerojet Rocketdyne Holdings Inc. (AJRD) in a transaction valued at $4.4 billion. The company said that acquiring Aerojet Rocketdyne will help to maintain and strengthen a key component of its domestic defense industrial base and reduce costs for its clients. The transaction is expected to close in the second half of 2021.

On November 25, 2020, Lockheed Martin announced the completion of its acquisition of Integration Innovation Inc.’s Hypersonics portfolio. The acquisition expands Lockheed’s ability to design, develop, and produce integrated hypersonic weapons.

On June 15, 2020, Lockheed Martin announced the appointment of James D. Taiclet to the roles of president and Chief Executive Officer (CEO). Mr. Taiclet is a Gulf War veteran and pilot who first joined the company’s board in 2018 and will continue to serve on the board. He succeeds Marilyn A. Hewson who has served as Lockheed Martin’s chairman, president, and CEO since 2014 and president and CEO since 2013. Ms. Hewson will become executive chairman of the board.

How Lockheed Martin Reports Diversity & 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.

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