Can Lockheed Martin (LMT) make Money from the HIMARS?

Vladimir Putin is boosting American defense contractor Lockheed Martin (LMT). Observers credit Lockheed Martin’s HIMARS for winning the Ukraine War.

For example, The Telegraph claims the HIMARS drove Russian forces out of the strategic city of Kherson. Retired US Lieutenant General Ben Hodges thinks HIMARS could soon drive Russian forces out of the Crimea, Ukrinform claims.

So what is HIMARS and why is it playing such an out-sized role in the Ukraine War? Ironically, the High Mobility Artillery Rocket System (HIMARS) is just a truck with a big rocket launcher on the back. Such weapons are not new, but they are effective.

Strangely, the Soviets invented the first such weapons system, the Katyusha rocket launcher, that helped the Red Army win World War II on the Eastern Front. German troops feared the Katyusha and gave it the nickname “Stalin’s Organ.” The Nazis were so impressed by the Katyusha they built their own rocket system, the Nebelwerfer, which terrified American and British troops. Thus, a modern version of a historic Russian weapons system is beating the Russian Army.

The World Loves HIMARS

The HIMARS has become the “star” of the Ukraine War because it’s destructive and hard to kill.

Russian forces could not destroy Ukraine’s 26 HIMARS trucks in four months of intense combat, Popular Mechanics claims. HIMARS is hard to kill because it fires missiles from hundreds of miles away and soldiers can drive it away after the rockets.

The HIMARS is effective because it is easy to operate. Any truck driver can drive the vehicle, and launching the rockets is a push-button operation. There’s none of the complex aiming cannons require. Instead, the computers in the rocket guide the projectile to its target.

Moreover, HIMARS appears easy to reload. Soldiers take off the launch pods, put rockets in, reattach the pod, and it fire again. Video shows crews can have several launch pods full of rockets ready to fire. Each pod contains up to six rockets, allowing HIMARS to deliver a lot of firepower.

Predictably, many governments are ordering HIMARS for their armies. For example, the Lithuanian government has ordered eight HIMARS for $495 million, The Defense Post reports. Armies in Lithuania’s neighbors are also ordering HIMARS. The Polish government has also ordered HIMARS. Moreover, the US Army plans to buy 500 HIMARS trucks over the next five years. 

Consequently Lockheed Martin (LMT) CEO Jim Taiclet plans to increase HIMARS production by 50%, The Defense Post reports. Lockheed Martin will increase HIMARS production from 60 to 96.  

Meet HIMARS

Lockheed Martin (NYSE: LMT) reports there are over 500 HIMARS in service worldwide. They claim those HIMARS have been in operation for over two million hours.

HIMARS is a “shoot-and-scoot” weapons system. That means HIMARS fires its rockets and drives off before the enemy can find it. Lockheed Martin claims can shoot-and-scoot in a few minutes.

Armies can move HIMARS on transport planes, such as the C-130, ships, and trains, or just drive it on roads on and highways. Since HIMARS is a wheeled truck, it can drive on any road or highway a truck can operate on and run at normal speeds.

Lockheed Martin claims HIMARS can fire rockets up to 499 kilometers (310.064 miles). However, standard HIMARS rockets have a 300 kilometer (186.411 mile) range. That means a HIMARS in Brooklyn could hit Philadelphia (94.5 miles away) with standard rockets like the GLMRS. Extended range munitions such as the ATACMS could allow a HIMARS in Brooklyn to hit Washington, DC (226.2 miles away).

HIMARS can fire many rockets. Those projectiles include the Guided Multiple Launch Rocket System (GLMRS) and the Army Tactical Missile System (ATACMS) .

Both rockets can carry several kinds of warheads. For example, the GLMRS can carry a 200-pound high explosive warhead. An inertial guidance package and the Global Positioning System (GPS) allow GLMRS to find its target. The ATACMS can carry up to 500 pounds of explosives. Thus, HIMARS delivers destruction at a long range.

Hence, it is easy to see why the Russians have such a hard time destroying HIMARS. It can attack them from over 100 miles away and drive off before they can target the vehicle.

Finally, HIMARS is just one of a family of Multiple Launch Rocket Systems (MLRS) weapons Lockheed Martin manufactures. For example, there’s a tracked version they call the MLRS M270.

Is Lockheed Martin (LMT) making money?

Lockheed Martin (LMT) is making one of the world’s most popular weapons systems. Investors will wonder if Lockheed Martin is making money?

Yes, Lockheed Martin is making money. For example, it reported a $2.12 billion quarterly gross profit and a $2.159 billion quarterly operating income on 30 September 2022. However, the quarterly gross profit fell from $2.302 billion on 30 September 2021, and the quarterly operating income fell from $2.294 billion on September 2021.

Overall, Lockheed Martin’s quarterly revenues rose from $16.028 billion on 30 September 2021 to $16.583 billion on 30 September 2022. Yet, the quarterly revenues fell from $17.029 billion on 30 June 2021 and rose from $15.446 billion on 30 June 2022.

Lockheed Martin’s revenues grew by 3.46% in the quarter ending on 30 September 2022. The revenue growth rate rose from -9.3% on 30 June 2022. Lockheed Martin is a growing company.

How Much Cash is Lockheed Martin Generating?

The Lockheed Martin Corporation (LMT) is generating more cash. The quarterly operating cash flow rose from $1.937 billion on 30 September 2021 to $3.133 billion on 30 September 2022.

However, Lockheed Martin reported a quarterly ending cash flow of $655 million on 30 September 2022. Thus, Lockheed Martin does not keep much cash.

For example, Lockheed Martin had $2.43 billion in cash and short-term investments on 30 September 2022. The cash and short-term investments fell from $2.727 billion on 30 September 2021.

One reason Lockheed Martin does not keep cash is that it pays off enormous amounts of debt. For example, Lockheed Martin reported a quarterly financing cash flow of -$2.08 billion on 30 September 2022.

Yet, Lockheed Martin’s debt is stable. The company reported a total debt of $11.48 billion on 30 September 2022. The total debt fell from $11.674 billion on 30 September 2021.

What Value Does Lockheed Martin (LMT) Offer?

Lockheed Martin (LMT) had $52.03 billion in total assets on 30 September 2022. The total assets rose from $51.843 billion on 30 September 2021.

I think Mr. Market overpriced LMT shares at $462.04 on 14 November 2022. Yet, Lockheed Martin overs enormous share value growth. Mr. Market paid $340.92 for Lockheed Martin’s shares on 15 November 2021. I consider that price far too high for a company with $52.03 billion in total assets and $2.43 billion in cash and short-term investments.

Yet Lockheed Martin offers an enormous attraction: a large dividend. Lockheed Martin has scheduled six $3.00 quarterly dividends between 27 December 2022 and 27 December 2024. Overall, Lockheed Martin shares offered a $12 forward dividend and a 2.60% forward dividend yield on 14 November 2022.

If you need dividend income and you can live with owning a weapons manufacturer, Lockheed Martin is worth investigating. People who think the world is entering an age of war and turmoil could profit from Lockheed Martin (LMT), particularly if they like big dividends and share-value growth.