Lockheed Martin Corp. (NYSE:LMT)

The analysis of the annual current and deferred income tax expenses reveals several notable trends over the five-year period.

Current Income Tax Expense

The current income tax expense shows an overall fluctuating but generally increasing trend from 2020 through 2023. It started at US$1,342 million in 2020, increased steadily to a peak of US$1,705 million in 2022, before declining to US$1,472 million in 2024. The increase between 2020 and 2022 suggests a rising tax liability associated with current income, while the subsequent decrease in 2023 and 2024 indicates a reduction in current tax expense, which could be due to changing profitability, tax rates, or other tax planning factors.

Deferred Income Tax Expense

The deferred income tax expense exhibits a contrasting pattern, as it was minimal at US$5 million in 2020 but turned significantly negative from 2021 onwards. The amount declined to -US$183 million in 2021 and further deepened to -US$757 million by 2022. Although there is a partial recovery in 2023 with -US$498 million, the deferred expense again declines to -US$588 million in 2024. This persistent negative deferred tax expense indicates the recognition of deferred tax benefits or timing differences reducing future tax liabilities significantly during these years.

Federal and Foreign Income Tax Expense

The combined federal and foreign income tax expense displays a downward trend over the period, starting at US$1,347 million in 2020 and decreasing to US$884 million by 2024. The expense fell notably in 2022 to US$948 million, and despite a temporary rise to US$1,178 million in 2023, it resumed its decline in 2024. This overall decrease aligns partially with the reduction seen in current tax expenses in the later years and may reflect changes in the company's tax jurisdiction mix, tax planning strategies, or varying profitability across geographies.

In summary, the current tax expenses increased initially but declined in the most recent periods, while deferred tax expenses transitioned from negligible to substantially negative, indicating significant deferred tax benefits. Simultaneously, the total federal and foreign income tax expense demonstrates a downward trajectory, suggesting an overall reduction in tax burden or shifting tax impacts over the analyzed timeframe.

The data reveals several notable trends in the tax-related figures over the five-year period ending in 2024. The U.S. federal statutory tax rate remains constant at 21% throughout the entire period, indicating no legislative change affecting the baseline corporate tax rate.

The foreign derived intangible income deduction exhibits an increasing negative impact on the tax rate, deepening from -2.1% in 2020 to -3.4% in 2024. This suggests a growing utilization or benefit from this deduction, which reduces the effective tax burden over time, although a slight dip is observed in 2023.

The research and development (R&D) tax credit similarly shows a strengthening effect, moving from -1.2% in 2020 to -3.3% in 2024. This trend indicates an increasing emphasis or investment in qualifying research activities, yielding a progressively greater reduction in taxable income.

Tax deductible dividends maintain a relatively stable but modest negative impact on the effective tax rate, fluctuating slightly between -0.8% and -1.1% over the years. There is no significant directional trend, implying consistent dividend payment policies or treatment for tax purposes across the observed period.

Excess tax benefits from share-based payment awards exhibit minor fluctuations, starting at -0.6% in 2020, decreasing to -0.3% by 2024, with the lowest point at -0.3% in both 2023 and 2024. The diminishing magnitude suggests a declining relative effect of these benefits on reducing the company’s tax liability.

The "Other, net" category shows variable data, starting with a minimal positive contribution (0.1%) in 2020, rising to 1.3% in 2024 following fluctuations in prior years. This variability hints at irregular or one-off items influencing the effective tax rate which do not follow a consistent pattern.

The effective tax rate itself trends downward overall, starting at 16.4% in 2020 and maintaining near that level through 2021, then decreasing to 14.2% in 2022, slightly rising to 14.5% in 2023, before returning to 14.2% in 2024. This lower effective tax rate compared to the statutory rate indicates the cumulative impact of various deductions and credits reducing the overall tax burden.

Summary of Observations

1. The statutory tax rate remains fixed at 21% with no changes during the period.

2. Foreign derived intangible income deduction and R&D tax credit increasingly reduce the effective tax rate, demonstrating growing benefits from these provisions.

3. Tax deductible dividends and excess tax benefits from share-based payments provide small but consistent negative adjustments to the tax rate.

4. The "Other, net" category fluctuates, reflecting irregular tax effects on the effective rate.

5. The effective tax rate declines overall from 16.4% to approximately 14.2%, consistently below the statutory rate due to these deductions and credits.

Pensions

The pension liabilities have shown a consistent decline over the observed periods, dropping from 2,994 million USD in 2020 to 1,184 million USD in 2024. This trend indicates a reduction in pension obligations, which may suggest improved pension fund management or changes in actuarial assumptions.

Accrued compensation and benefits

These liabilities remained relatively stable, fluctuating slightly between 926 million USD in 2020 and 741 million USD in 2024. The small variation implies steady employee-related obligations without significant changes in compensation accrual policies.

Contract accounting methods

This item displays a notable upward trend, increasing from 392 million USD in 2020 to 949 million USD in 2024, with a substantial jump occurring between 2023 and 2024. This rise may reflect changes in contract revenue recognition or an increase in contract assets.

Research and development expenditures

Data is available starting in 2022, showing initial expenditures of 2,268 million USD, followed by a decrease to 1,251 million USD in 2023 and then a partial recovery to 1,643 million USD in 2024. This volatility could indicate shifting priorities or project timelines impacting R&D investment levels.

Domestic company operating losses

This item has a single reported figure of 83 million USD in 2024, suggesting the recognition of previously unreported losses in the most recent period.

Foreign company operating losses and credits

There is a clear reduction trend in foreign operating losses and credits, declining steadily from 51 million USD in 2020 to 6 million USD in 2024. This could reflect improved foreign operations profitability or changes in tax structures.

Other (assets/liabilities)

The "Other" category under assets showed a relatively stable pattern, hovering between 471 and 522 million USD. Conversely, the "Other" category under liabilities exhibits fluctuations, ranging from -547 million USD in 2020 to -638 million USD in 2024, indicating minor increased obligations in miscellaneous items.

Deferred tax assets, gross

After an initial decrease from 4,872 million USD in 2020 to 3,925 million USD in 2021, this figure increased sharply to 5,327 million USD in 2022, followed by another drop and recovery, ending at 5,128 million USD in 2024. These movements suggest changes in temporary differences or tax planning strategies affecting deferred tax assets.

Valuation allowance

The valuation allowance has increased in magnitude from -13 million USD in 2020 to -41 million USD in 2024, indicating a growing reservation against deferred tax assets, perhaps due to reduced expectations of future tax benefit realizations.

Deferred tax assets, net

The net deferred tax assets follow a pattern similar to the gross amounts but adjusted by the valuation allowance. It decreased in 2021, peaked in 2022 at 5,296 million USD, then decreased and recovered again by 2024 at 5,087 million USD, showing overall strengthening but some volatility.

Goodwill and intangible assets

These have steadily increased in negative value from -363 million USD to -545 million USD over the period, indicating amortization or impairment effects reducing their carrying amounts.

Property, plant and equipment

This asset category shows decreasing negative values from -481 million USD in 2020 to -371 million USD in 2024, suggesting disposals or depreciation reducing the net book value.

Deferred tax liabilities

Deferred tax liabilities have increased slightly in magnitude, moving from -1,391 million USD in 2020 to -1,554 million USD in 2024, with variations in the interim years. This trend signals increasing taxable temporary differences.

Net deferred tax assets (liabilities)

The net deferred tax position reflects an overall improvement from 3,468 million USD in 2020 to 3,533 million USD in 2024, despite fluctuations in the intermediate years, indicating a generally strong net deferral asset position.

Deferred Tax Assets

The deferred tax assets exhibited a fluctuating trend over the five-year period. Starting at 3,475 million USD in 2020, the value decreased noticeably to 2,290 million USD in 2021. Subsequently, there was a strong rebound to 3,744 million USD in 2022, followed by another decline to 2,953 million USD in 2023. The most recent data point in 2024 shows an increase once again to 3,557 million USD. Overall, the deferred tax assets demonstrate volatility but tend to revert close to the initial value by the end of the period.

Deferred Tax Liabilities (included in Other Noncurrent Liabilities)

The deferred tax liabilities remained very low in absolute terms throughout the period, but a rising trend is apparent. Starting from 7 million USD in 2020, the liabilities increased marginally to 8 million USD in 2021, then dipped slightly to 5 million USD in 2022. From 2022 onwards, there was a consistent growth, reaching 10 million USD in 2023 and surging to 24 million USD in 2024. This indicates increasing deferred tax obligations over time, especially notable in the most recent year.

The analysis of the financial data reveals several notable trends across the reported and adjusted figures for total assets, total liabilities, stockholders' equity, and net earnings over the five-year period.

Total Assets

Reported total assets increased modestly from 50,710 million US dollars at the end of 2020 to 55,617 million by the end of 2024, showing overall growth despite a slight dip in 2023. Adjusted total assets followed a similar pattern, rising steadily each year from 47,235 million to 52,060 million. The difference between reported and adjusted total assets suggests some recurring adjustments affecting the asset base, but both metrics indicate an overall expansion of asset holdings over the period.

Total Liabilities

Reported total liabilities showed a mixed trend, initially decreasing from 44,672 million in 2020 to 39,914 million in 2021, then increasing steadily to 49,284 million by 2024. Adjusted liabilities tracked closely with reported figures throughout, implying consistent treatment of liabilities in adjustments. The increasing liabilities in later years could point to higher leverage or growing obligations in the business operations as the company expanded.

Stockholders’ Equity

Stockholders’ equity on a reported basis rose significantly from 6,015 million in 2020 to a peak of 10,959 million in 2021, but then declined sharply over the next three years to 6,333 million in 2024. Adjusted equity showed a different trajectory, starting much lower at 2,547 million in 2020, increasing to 8,677 million in 2021, but then continuously decreasing to 2,800 million by 2024. This indicates the presence of adjustments that substantially reduce equity values and a downward trend in equity during the latter years, potentially reflecting dividends, share buybacks, losses elsewhere, or other financial activities impacting retained earnings and reserves.

Net Earnings

Reported net earnings demonstrate some volatility, declining from 6,833 million in 2020 to 5,732 million in 2022, rebounding to 6,920 million in 2023, and then decreasing again to 5,336 million in 2024. Adjusted net earnings follow a broadly similar pattern but show larger variability, dropping more markedly from 6,838 million in 2020 to 4,975 million in 2022, rising to 6,422 million in 2023, then falling further to 4,748 million in 2024. The adjustments appear to reduce earnings consistently across all years except for 2023, where adjusted earnings are relatively closer to the reported figure. This suggests adjustments may relate to tax effects or other factors impacting net profitability.

Overall, total assets and liabilities display growth with some fluctuations, while equity shows a rising then declining pattern heightened by adjustments. Net earnings are volatile, with adjustments generally lowering profitability metrics. These trends together suggest a company experiencing growth, increased liabilities, and variability in earnings and equity, possibly influenced by tax-related adjustments and operational dynamics over the analyzed period.

Net Profit Margin

Both reported and adjusted net profit margins exhibit a declining trend over the observed periods. Reported net profit margin decreased from 10.45% in 2020 to 7.51% in 2024, showing fluctuations but an overall downward trajectory. Similarly, adjusted net profit margin declined more markedly from 10.46% in 2020 to 6.68% in 2024, indicating a consistent reduction in profitability when considering deferred income tax adjustments.

Total Asset Turnover

Total asset turnover ratios remain relatively stable over time. Reported values slightly fluctuate around 1.29, with a minor dip to 1.25 in 2022 but recovering thereafter up to 1.28 in 2024. Adjusted ratios are consistently higher than reported figures, maintaining a narrow range between 1.34 and 1.38, suggesting steadiness in asset utilization efficiency, unaffected significantly by tax adjustments.

Financial Leverage

Financial leverage shows substantial volatility across the periods with notable differences between reported and adjusted figures. Reported financial leverage decreases significantly from 8.43 in 2020 to 4.64 in 2021, then gradually rises to 8.78 by 2024. Adjusted financial leverage follows a similar but more pronounced pattern: a steep decline from 18.55 in 2020 to 5.60 in 2021, followed by a consistent increase to 18.59 in 2024. This suggests considerable fluctuations in the company's reliance on debt financing, amplified when tax adjustments are made.

Return on Equity (ROE)

Reported ROE experiences high volatility, decreasing from an extremely high 113.6% in 2020 to 57.62% in 2021, then recovering somewhat to 84.26% in 2024 after peaking at 101.24% in 2023. Adjusted ROE exhibits even greater variability, with an exceptionally elevated 268.47% in 2020, dropping drastically to 70.67% in 2021, then rising to 169.57% in 2024. The pronounced differences underline the influence of deferred tax adjustments and leverage fluctuations on equity profitability.

Return on Assets (ROA)

Both reported and adjusted ROA ratios decline overall during the period. Reported ROA decreases from 13.47% in 2020 to 9.59% in 2024, with a slight recovery in some years. Adjusted ROA similarly shows a downward movement from 14.48% to 9.12%, indicating reduced asset profitability after considering deferred tax elements. The trend reflects a gradual reduction in the efficiency of asset utilization contributing to earnings.

The financial data reveals notable fluctuations in both reported and adjusted net earnings over the five-year period. Reported net earnings began at 6,833 million US dollars in 2020 and experienced a gradual decline through 2022, falling to 5,732 million US dollars. This was followed by a recovery in 2023 to 6,920 million US dollars before dropping again to 5,336 million US dollars in 2024. Similarly, adjusted net earnings showed a downward trajectory starting from 6,838 million US dollars in 2020, decreasing more sharply through 2022 to 4,975 million US dollars, then partially rebounding to 6,422 million US dollars in 2023, and declining notably to 4,748 million US dollars in 2024.

The net profit margins mirror the trends seen in earnings. The reported net profit margin declined steadily from 10.45% in 2020 to 8.69% in 2022, before improving to 10.24% in 2023 and reaching a low of 7.51% in 2024. Adjusted net profit margins followed a similar pattern but at consistently lower levels, moving from 10.46% in 2020 downward to 7.54% in 2022, then rising to 9.5% in 2023, and decreasing again to 6.68% in 2024.

Overall, the data indicates a period of volatility in profitability and earnings performance with two distinct phases of decline followed by partial recovery. The more pronounced decreases in adjusted figures suggest that factors excluded by adjustments, potentially including tax or one-off items, have a significant impact on the reported results. The decline in profit margins in 2024 highlights an erosion of profitability relative to revenues, warranting further investigation into cost structure or operational efficiency during that period.

The analysis of the reported and deferred income tax adjusted financial data reveals several notable trends over the five-year period.

Total Assets

Reported total assets exhibit a gradual upward trend from 50,710 million US dollars in 2020 to 55,617 million US dollars in 2024, indicating a consistent increase in the asset base over this timeframe. Adjusted total assets also show a steady increase, rising from 47,235 million US dollars in 2020 to 52,060 million US dollars in 2024. Although adjusted total assets remain lower than reported total assets each year, the parallel upward movement in both metrics suggests growth in the overall asset structure regardless of the adjustments applied.

Total Asset Turnover Ratios

Reported total asset turnover ratios fluctuate slightly but remain relatively stable, starting at 1.29 in 2020, reaching a peak of 1.32 in 2021, then slightly declining to 1.25 in 2022 before stabilizing at around 1.28 to 1.29 in 2023 and 2024. This pattern implies a consistency in the efficiency with which the company utilizes its assets to generate revenue, despite minor variations.

Adjusted total asset turnover ratios follow a similar trend but at generally higher levels compared to reported ratios. The adjusted ratios begin at 1.38 in 2020 and maintain that value into 2021, followed by a slight decrease to 1.34 in 2022. Ratios then mildly recover to 1.36 in both 2023 and 2024, indicating that when adjustments for deferred income taxes are considered, asset utilization efficiency is viewed more favorably. The stability of these ratios suggests consistent operational efficiency.

Comparative Insights

Overall, both reported and adjusted total assets have increased steadily, while the turnover ratios demonstrate minor fluctuations but no significant deterioration or improvement in asset utilization. The higher adjusted turnover ratios compared to reported ratios may reflect the beneficial impact of adjusting for deferred income taxes when assessing operational performance.

The data indicates a stable asset management environment with moderate growth in assets and sustained efficiency in asset usage over the period analyzed.

The financial data reveals notable trends in the company's assets, equity, and leverage ratios over the five-year period.

Total Assets

Reported total assets show a generally increasing trend, rising from $50,710 million in 2020 to $55,617 million in 2024, despite a slight dip in 2023. The adjusted total assets also increase steadily, from $47,235 million in 2020 to $52,060 million in 2024, showing more consistent growth compared to the reported figures.

Stockholders’ Equity

Reported stockholders’ equity experiences significant fluctuation. It jumps markedly from $6,015 million in 2020 to $10,959 million in 2021, then declines progressively over the subsequent years to $6,333 million in 2024. Adjusted stockholders’ equity follows a similar downward trajectory after 2021, decreasing from $8,677 million in 2021 to $2,800 million in 2024. The adjusted figures consistently trail the reported equity values, indicating the impact of deferred income tax adjustments.

Financial Leverage

Reported financial leverage ratio declines dramatically from 8.43 in 2020 to 4.64 in 2021, before rising steadily to 8.78 in 2024. The adjusted financial leverage ratio shows a more volatile pattern, falling sharply from 18.55 in 2020 to 5.6 in 2021, followed by a steady increase to 18.59 in 2024. The disparities between reported and adjusted leverage ratios broaden over time, reflecting the influence of deferred tax adjustments on the company's capital structure assessment.

Overall, the data indicates that adjustments related to deferred income taxes notably affect the presentation of equity and leverage. While total assets grow steadily, equity decreases after an initial peak in 2021 when adjusted for tax effects, leading to increased financial leverage over the latter years. This suggests a rising reliance on debt relative to equity under the adjusted basis, which may have implications for financial risk and capital management strategies.

The financial data exhibits fluctuating trends across several key metrics between 2020 and 2024. Both reported and adjusted net earnings demonstrate an overall declining pattern, albeit with periods of recovery. Reported net earnings peaked in 2020 at 6,833 million US dollars, decreasing steadily to 5,336 million by the end of 2024. A similar trajectory is observed in adjusted net earnings, which decreased more substantially from 6,838 million in 2020 to 4,748 million in 2024, indicating adjustments had an increasing impact on reported profitability over time.

Stockholders’ equity, in both reported and adjusted forms, reflects a notable reduction over the five-year period. Reported stockholders’ equity increased significantly from 6,015 million US dollars in 2020 to a peak of 10,959 million in 2021, followed by a descending trend to 6,333 million in 2024. Adjusted stockholders’ equity, however, shows a marked and consistent decline starting at 2,547 million in 2020 and falling steadily to 2,800 million in 2024, with a sharp decrease between 2021 and 2023. The divergence between reported and adjusted equity may suggest the presence of considerable deferred tax adjustments impacting equity values.

Return on equity (ROE) figures, both reported and adjusted, also reveal significant volatility. Reported ROE started at an exceptionally high 113.6% in 2020, decreased to 57.62% in 2021, and remained somewhat steady between 61.86% and 101.24% before settling at 84.26% by 2024. Adjusted ROE values present an even more pronounced variability, initially at a very high 268.47% in 2020, sharply declining to 70.67% in 2021, and then fluctuating considerably before stabilizing near 170% in 2024. This volatility suggests that earnings relative to adjusted equity were substantially more sensitive to changes in financial adjustments and deferred tax items compared to reported figures.

Overall, the data indicates a contraction in both profitability and equity base over time when adjusted for deferred taxes and other tax-related adjustments, alongside substantial variability in efficiency metrics such as ROE. The magnitude of adjustments reflected in the equity and ROE figures underscores the importance of considering deferred tax impacts in evaluating the company's financial performance and capital structure.

Net Earnings

The reported net earnings demonstrate a fluctuating trend over the five-year period. Starting at 6,833 million USD in 2020, there is a slight decline in 2021 and a further reduction in 2022, reaching 5,732 million USD. In 2023, reported earnings recover to 6,920 million USD but then decrease again to 5,336 million USD in 2024. Adjusted net earnings follow a similar trajectory, beginning at 6,838 million USD in 2020, falling more sharply to 4,975 million USD in 2022, rebounding to 6,422 million USD in 2023, and then declining to 4,748 million USD in 2024. This pattern indicates volatility with notable dips in 2022 and 2024.

Total Assets

Reported total assets show a generally upward movement, starting at 50,710 million USD in 2020 and incrementally increasing to 55,617 million USD by 2024, despite a minor reduction in 2023 compared to 2022. Adjusted total assets similarly rise over the same period from 47,235 million USD in 2020 to 52,060 million USD in 2024, with a steady increase each year. This consistent growth in asset base suggests ongoing investment or asset acquisition activity.

Return on Assets (ROA)

Reported ROA mirrors the net earnings pattern, starting at 13.47% in 2020, experiencing a decrease in 2021 and 2022 to 10.84%, then recovering sharply in 2023 to 13.19% before dropping significantly to 9.59% in 2024. Adjusted ROA follows a comparable trend, initially higher at 14.48% in 2020, declining through 2022 to 10.12%, rising to 12.97% in 2023, and falling to 9.12% in 2024. These fluctuations highlight variability in asset efficiency and profitability, with 2023 being a comparatively strong year and 2024 showing the weakest profitability measured against assets.

Overall Insights

The financial data indicate a volatile earnings environment with noticeable drops in 2022 and again in 2024 after partial recovery in 2023. Total assets demonstrate steady growth, implying sustained company expansion or asset accumulation despite earnings fluctuations. The return on assets aligns with these earnings trends, underscoring changes in the company’s ability to generate profit from its asset base. The divergence between reported and adjusted figures suggests adjustments have a material impact on profitability measurements, particularly in earnings and ROA, which may reflect tax or accounting treatments influencing reported results versus adjusted operational performance.