Cash Flow Q1 2024 vs Q1 2023

Net cash provided by operating activities increased from $1,564 million to $1,635 million; net change in cash and cash equivalents improved from –$107 million to $1,348 million " " " "

The significant improvement in cash flow was driven primarily by the issuance of $2 billion in long-term debt, a factor absent in Q1 2023, which boosted financing inflows. Additionally, changes in working capital (Accounts Payable increased from $1,217 million to $1,301 million, and Contract Liabilities decreased more significantly from $152 million to $445 million) and higher capital expenditures (up from $294 million to $378 million) further influenced the cash flow dynamics, coupled with increased share repurchases ($500 million to $1 billion). " " "

Cash Flow Q1 2025 vs Q1 2024

Operating cash flow dropped from approximately $1.6 billion to $1.4 billion and free cash flow declined from $1.3 billion to $955 million " " "

In Q1 2025, cash flows suffered due to an increase in contract assets (affecting cash conversion timing), higher insurance costs, and different timing in employee-related accrual payments, which were only partly offset by a decrease in accounts receivable and a rise in accounts payable. Furthermore, higher software expenditures further reduced free cash flow relative to Q1 2024. " " "

Balance Sheet Q1 2024 vs December 2023

Cash and cash equivalents increased from $1,442 million to $2,790 million; contract assets rose from $13,183 million to $14,050 million; accounts payable increased from $2,312 million to $3,523 million; long-term debt increased from $17,291 million to $19,250 million " " " "

The balance sheet in Q1 2024 improved significantly due to strong operating cash flows (with $1,635 million generated) combined with a $2 billion debt issuance boosting cash balances. This was accompanied by higher contract assets and accounts payable reflecting increased production and revenue recognition activities, while share repurchases and dividend payments affected retained earnings and contract liabilities, and long-term debt rose accordingly. " " " "

Balance Sheet Q1 2025 vs December 2024

Contract assets increased from $12,957 million to $14,677 million; accounts payable rose from $2,222 million to $3,821 million; cash and cash equivalents decreased from $2,483 million to $1,803 million; long-term debt decreased from $19,627 million to $18,661 million " " " "

In Q1 2025, the balance sheet reflects timing and payment impacts: Contract assets and accounts payable increased due to the timing of contract milestones and supplier payments, while cash was reduced significantly by dividend payments ($796 million) and share repurchases ($750 million) along with higher software expenditures. Additionally, a decrease in long-term debt indicates active debt repayments during the quarter. " " " "

Income Statement Q1 2024 vs Q1 2023

Net sales increased by $2.1 billion (14%) from $15.1 billion to $17.2 billion; operating profit remained nearly flat around $2.03 billion; net earnings declined from $1.69 billion to $1.55 billion (9% drop); cost of sales increased by $2.1 billion (16%) " " " " " " " "

Q1 2024 saw strong sales growth, largely due to higher volumes in Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space segments (including an extra week adding to sales), but operating profit was flat because of a $100 million reach-forward loss in the Missiles segment and rising input costs. Elevated interest expense (rising from $202 million to $255 million) and a significant drop in non-service FAS pension income also led to lower net earnings, despite the sales boost. " " " " " " " "

Income Statement Q1 2025 vs Q1 2024

Sales increased by 4% from $17.2 billion to $18.0 billion; consolidated operating profit increased by 17% from $2.0 billion to $2.4 billion; net earnings rose from $1.5 billion to $1.7 billion; diluted EPS increased from $6.39 to $7.28 " " " " " " " "

In Q1 2025, improved performance is evident with a 4% increase in sales driven by higher volumes in most segments, notably the 50% operating profit increase in Missiles and Fire Control due to the absence of a $100 million loss seen in Q1 2024. This translated into a 17% boost in operating profit and corresponding net earnings improvements, while EPS benefited both from higher earnings and the impact of share repurchases reducing outstanding shares. " " " " " " " "

Sales

FY 2025

no prior guidance

$73.75 billion to $74.75 billion "

no prior guidance

Segment Operating Profit

FY 2025

no prior guidance

$6.6 billion to $6.7 billion, with an implied midpoint margin of 9% "

no prior guidance

EPS

FY 2025

no prior guidance

$21.70 to $22.00 "

no prior guidance

Free Cash Flow

FY 2025

no prior guidance

$6.6 billion to $6.8 billion "

no prior guidance

Pension Contribution

FY 2025

No pension contribution "

No pension contribution expected "

no change

F-35 Program Demand/Production/Modernization

Mentioned consistently in Q1 2025 " " " " " , Q4 2024 " " " " , and Q3 2024 " " " with strong international orders, robust delivery expectations, and ongoing modernization efforts.

In Q2 2025, strong international demand is emphasized with new orders (UK, Belgium), completed TR3 hardware integration, new software rollout, and efforts to integrate NGAD technologies. " " "

Consistently strong with continuous modernization; sentiment remains highly positive and focused on future growth. " " "

Backlog Growth and Contract Pipeline

Addressed in Q1 2025 " " " , Q4 2024 " " and Q3 2024 " " " emphasizing record backlogs and robust contract prospects.

Q2 2025 highlights a $167 billion backlog, expectations for record growth in the second half, and expansion of the contract pipeline (including F-35 Lot 18-19 and Golden Dome discussions). " "

Consistent robustness with further growth; overall positive impact on future orders and sustained demand. " "

Technological Innovation and Advanced Defense Capabilities

Consistently discussed in Q1 2025 " " " , Q4 2024 " " " , and Q3 2024 " " with focus on NGAD, AI, autonomy, hypersonics and digital integration.

In Q2 2025, innovation is reaffirmed with enhanced combat effectiveness, TR3 integration, hypersonic weapon development, and improved missile defense capabilities. " " "

Steady and sustained emphasis on advanced technologies; sentiment remains upbeat with continuous capability enhancements. " "

Financial Performance, Cash Flow, and Profitability Management

Discussed in Q1 2025 " " " , Q4 2024 " " " and Q3 2024 " " , noting strong sales growth, robust free cash flow, and healthy margins.

Q2 2025 reports $18.2 billion in sales, free cash flow usage issues due to working capital challenges from delayed F-35 awards and tariff impacts, and significant charges affecting margins. " "

Overall strong performance continues but with increased focus on margin headwinds and working capital timing challenges; mixed sentiment. " "

Legacy Program Losses and Associated Risks

Addressed in Q1 2025 with a $100 million loss in the MFC segment " , in Q4 2024 with significant charges " " , and in Q3 2024 with detailed discussions on recalibration and risk. " "

Q2 2025 reveals $1.8 billion in legacy losses across multiple programs (including Turkish Utility, Canadian Maritime, and Aeronautics classified), with enhanced reviews and corrective actions initiated. " " "

Increasingly concerning with larger recognized losses and stronger corrective measures; sentiment is more cautionary and risk-aware. " " "

Government Funding, Policy, and Budget Uncertainty

Discussed in Q1 2025 " " , Q4 2024 " " and Q3 2024 " " relating to continuing resolutions and funding delays affecting the F-35 program.

Q2 2025 covers adjustments in F-35 funding (House increasing orders despite administration’s request), Golden Dome initiative discussions, and related IRS tax issues impacting government funding dynamics. " " " "

Consistent uncertainty persists with nuanced optimism (e.g., higher congressional numbers) but overall remains an area of significant attention. " " "

Supply Chain and Tariff Challenges

In Q1 2025, there is discussion on tariff protections and domestic sourcing " " , while Q4 2024 mentions improvements in supply chain performance " ; Q3 2024 did not include this topic.

Q2 2025 specifically highlights tariff impacts ($100 million) and a $600 million working capital headwind due to delayed F-35 awards, underscoring increased short-term challenges. " "

Emerging as a more critical concern in the current period compared to earlier calls; sentiment indicates heightened awareness and caution. " "

Enhanced Program Oversight and Risk Management

Q3 2024 " and Q4 2024 " discussed steps to improve oversight in classified programs with recalibration measures in place.

In Q2 2025, Lockheed Martin details enhanced oversight measures including reconstituted review teams, increased senior management participation, and companywide sharing of lessons learned to mitigate risks. " "

Continued and increasingly rigorous focus on oversight and risk management; proactive measures indicate a strategic shift from reactive to preventative actions. " "

Software Integration and F-35 Technology Refresh Challenges

Covered in Q1 2025 " " , Q4 2024 " " , and Q3 2024 " with discussions on TR3 progress, release phases, and integration challenges.

Q2 2025 reports that TR3 hardware integration is complete and new software has been released to the fleet, indicating progress in overcoming earlier challenges. "

Positive momentum with ongoing progress; the emphasis has shifted from challenges to successful integration and fielding of upgrades. "

Tax Liability and Regulatory Compliance Risks

Not mentioned in Q1 2025, Q4 2024, or Q3 2024 (N/A).

Q2 2025 introduces a significant IRS dispute regarding a $4.6 billion tax liability and related interest accrual, marking a new and notable regulatory compliance risk. " " "

New and potentially adverse development; added risk with a sizable tax liability that could impact future cash flows and financial planning. " " "

Margin Pressure and Fixed-Price Contract Risks

Q1 2025 touched on tariff and fixed-price recovery mechanisms " ; Q4 2024 discussed margin declines and fixed-price contract challenges " " ; Q3 2024 indirectly addressed aggressive bidding practices and cost management. " "

Q2 2025 highlights significant margin pressure due to large charges (e.g., $1.6 billion via Skunk Works and Sikorsky) and emphasizes risks inherent in fixed-price contracts, prompting reevaluation with customers. " " " "

Continued concern with increased emphasis in Q2 2025; sentiment is more cautious due to heightened charges and reassessment of fixed-price contract risks. " "