Lockheed Martin Corp. (LMT - Free Report) reported fourth-quarter 2019 earnings of $5.29 per share, which surpassed the Zacks Consensus Estimate of $4.99 by 6%. The bottom line also improved by 20.5% from $4.39 reported in the year-ago quarter. This year-over-year upside can be attributed to solid sales and operating profit growth.

For 2019, earnings were $21.95 per share, which rose 24.8% from $17.59 in the year-ago quarter. Moreover, the full-year earnings figure exceeded the Zacks Consensus Estimate of $21.64 by 1.4%.

Operational Highlights

In the reported quarter, net sales amounted to $15.88 billion, which beat the Zacks Consensus Estimate of $15.28 billion by 3.98%. The reported figure also increased 10.2% from $14.41 billion a year ago. Notably, all segments reported year-over-year sales growth during the fourth quarter.

The company reported an operating profit of $1.64 billion compared with the year-ago quarter’s $1.51 billion.

In 2019, total revenues grew 11.3% year over year to $59.81 billion. Full-year revenues surpassed the Zacks Consensus Estimate of $59.19 billion by 1%.

Backlog

Lockheed Martin ended the fourth quarter (on Dec 31, 2019) with $144 billion in backlog, up 4.8% from $137.4 billion at the end of fourth-quarter 2018. Of this, the Aeronautics segment accounted for $55.6 billion, while the Rotary and Mission Systems segment contributed $34.3 billion. While the Space Systems segment accounted for $28.3 billion, the Missiles and Fire Control segment contributed $25.8 billion.

Segmental Performance

Aeronautics: Sales increased 8.5% year over year to $6.38 billion, primarily driven by higher net sales from the F-35 program owing to increased volume on sustainment and development contracts. Also, increased sales from classified programs contributed to this segment’s top-line growth.

While operating profit improved 8.5% year over year to $679 million, operating margin remained flat at 10.6%.

Missiles and Fire Control: Quarterly sales rose 14.1% year over year to $2.77 billion, owing to higher sales from tactical and strike missiles programs. Also, increased sales from integrated air and missile defense programs along with elevated sales from sensors and global sustainment programs contributed to this unit’s top-line growth.

While operating profit declined 7.45% year over year to $348 million, operating margin contracted 290 bps to 12.6%.

Rotary and Mission Systems: Quarterly sales of $3.89 billion improved 7.6% from the prior-year quarter on account of higher net sales from training and logistics (TLS) programs, C6ISR programs, and integrated warfare systems and sensors (IWSS) programs.

Operating profit increased 22.1% year over year to $353 million, while operating margin expanded 110 bps to 9.1%.

Space Systems: Sales improved 14% year over year to $2.84 billion in the fourth quarter. The uptick was driven by higher net sales from government satellite programs, Global Positioning System (GPS) III as well as strategic and missile defense programs.

Operating profit also increased 16% to $260 million, while operating margin improved 20 bps to 9.2% in the reported quarter.

Lockheed Martin Corporation Price, Consensus and EPS Surprise

Lockheed Martin Corporation price-consensus-eps-surprise-chart | Lockheed Martin Corporation Quote

Financial Condition

Lockheed Martin’s cash and cash equivalents totaled $1.51 billion as of Dec 31, 2019, compared with $0.77 billion at the end of 2018. Long-term debt was $11.4 billion, lower than the prior year’s end level of $12.60 billion.

Cash from operations at the end of fourth-quarter 2019 amounted to $7.31 billion compared with $3.14 billion a year ago.

During the reported quarter, the company repurchased 1.3 million shares for $490 million compared with 2.25 million shares repurchased a year ago for $666 million.

Lockheed Martin paid out dividends worth $675 million to its shareholders in the fourth quarter compared with the year-ago quarter’s $622 million.

Guidance

Lockheed Martin issued its financial guidance for 2020. The company expects to generate revenues of $62.75-$64.25 billion. Additionally, it expects to deliver earnings per share of $23.65-$23.95.

The company also expects to generate cash from operations of more than $7.6 billion during the year.