Lockheed Martin's (LMT) Q4 2024 financial performance showed a decline in net earnings to $5.3 billion ($22.31 per share) compared to $6.9 billion ($27.55 per share) in 2023. This decrease was influenced by factors such as lower operating profit and higher interest expenses. However, earnings per share benefited from a reduction in weighted average common shares outstanding due to share repurchases.

Net sales for Q4 2024 increased by 5% to $71.0 billion compared to $67.6 billion in 2023. This growth was driven by higher product sales in the Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Aeronautics segments, as well as increased service sales in Aeronautics and Space. The Aeronautics segment, for instance, saw higher volumes on F-35 production and sustainment contracts.

Operating profit for 2024 declined to $7.0 billion from $8.5 billion in 2023. This was partly due to unfavorable profit booking rate adjustments, including losses of $555 million on a classified Aeronautics program and $1.4 billion on a classified MFC program. These losses were partially offset by favorable adjustments, such as $155 million related to a resolved claim on the C-5 Galaxy aircraft contract.

Free cash flow (FCF) for 2024 was $5.3 billion, a decrease of $942 million compared to 2023. This decline was primarily due to a $948 million reduction in net cash provided by operating activities, which was impacted by a $990 million pension contribution. Capital expenditures remained relatively stable at $1.7 billion.

Lockheed Martin's liquidity position improved, with cash and cash equivalents increasing to $2.5 billion at the end of 2024, compared to $1.4 billion in 2023. This was supported by net cash inflows from operating activities of $7.0 billion, despite higher pension contributions and tax payments.

Shareholder returns remained robust, with $3.1 billion paid in dividends ($12.75 per share) and $3.7 billion spent on share repurchases in 2024. The company also increased its quarterly dividend to $3.30 per share in Q4 2024 and expanded its share repurchase authorization by $3.0 billion, leaving $9.3 billion available for future buybacks.

Segment performance highlights include a 4% increase in Space operating profit to $1.2 billion, driven by favorable contract mix and cost recoveries, despite lower profit booking rate adjustments on the Orion program. The Aeronautics segment saw a decline in operating profit due to classified program losses, while RMS and MFC experienced mixed results due to varying program volumes and cost dynamics.

Macroeconomic and operational challenges such as supply chain disruptions, inflation, and rising labor costs adversely impacted margins on certain programs. The company implemented mitigation strategies, including long-term contracts and supplier support, but these challenges remain a risk to future profitability, particularly for fixed-price contracts.

Debt and capital structure management included the issuance of $3.0 billion in senior unsecured notes and the repayment of $168 million in long-term debt. Total debt increased to $20.3 billion, while the company maintained compliance with all debt covenants.