Common-Size Income Statement

Lockheed Martin Corp., common-size consolidated income statement

12 months ended:	Dec 31, 2025	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Products	83.49%	83.44%	83.27%	84.06%	84.18%
Services	16.51%	16.56%	16.73%	15.94%	15.82%
Sales	100.00%	100.00%	100.00%	100.00%	100.00%
Products	-75.98%	-77.21%	-74.30%	-75.13%	-74.99%
Services	-15.11%	-14.38%	-14.84%	-14.06%	-14.11%
Impairment and severance charges	-0.09%	-0.12%	-0.14%	-0.15%	-0.05%
Other unallocated, net	1.33%	1.47%	1.82%	1.91%	2.67%
Operating costs and expenses	-89.85%	-90.25%	-87.45%	-87.44%	-86.48%
Gross profit	10.15%	9.75%	12.55%	12.56%	13.52%
Other income, net	0.15%	0.12%	0.04%	0.09%	0.09%
Operating profit	10.30%	9.87%	12.59%	12.65%	13.61%
Interest expense	-1.49%	-1.46%	-1.36%	-0.94%	-0.85%
Non-service FAS pension income (expense)	-1.16%	0.09%	0.66%	-1.47%	-1.93%
Other non-operating income (expense), net	0.24%	0.25%	0.09%	-0.11%	0.43%
Earnings from continuing operations before income taxes	7.89%	8.76%	11.98%	10.12%	11.26%
Income tax expense	-1.21%	-1.24%	-1.74%	-1.44%	-1.84%
Net earnings	6.69%	7.51%	10.24%	8.69%	9.42%

Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).

The common-size income statement reveals several noteworthy trends between 2021 and 2025. Revenue contributions from Products remained relatively stable, fluctuating between 83.27% and 84.18% of total sales. Conversely, the proportion of revenue derived from Services exhibited an increasing trend, rising from 15.82% in 2021 to 16.73% in 2023 before settling at 16.51% in 2025.

A significant shift is observed in profitability metrics. Gross profit as a percentage of sales declined consistently from 13.52% in 2021 to a low of 9.75% in 2024, with a slight recovery to 10.15% in 2025. This decline coincided with a substantial increase in operating costs and expenses, which rose from 86.48% of sales in 2021 to 90.25% in 2024, before decreasing slightly to 89.85% in 2025.

Revenue Composition: The consistent dominance of Products revenue, alongside the gradual increase in Services revenue, suggests a potential strategic shift towards a more service-oriented business model, though Products remain the primary revenue driver.
Profitability Analysis: The decline in gross profit margin, coupled with rising operating expenses, indicates increasing cost pressures or reduced pricing power. The recovery in gross profit in 2025 is a positive sign, but operating expenses remain elevated.
Interest Expense: Interest expense as a percentage of sales increased steadily from 0.85% in 2021 to 1.49% in 2025, suggesting a potential increase in debt financing or rising interest rates. This trend negatively impacts overall profitability.
Non-Operating Items: Non-service FAS pension income (expense) experienced volatility, moving from a negative 1.93% in 2021 to a positive 0.66% in 2023 before becoming negative again in 2025 (-1.16%). Other non-operating income (expense), net, remained relatively small but fluctuated, indicating potential inconsistencies in these income sources.
Net Earnings: Net earnings as a percentage of sales mirrored the trend in operating profit, declining from 9.42% in 2021 to 6.69% in 2025. This decline is attributable to the combined effects of lower gross profit margins, increased operating expenses, and rising interest expense.

Impairment and severance charges, while relatively small, consistently reduced net sales, with a peak impact in 2022. Other unallocated expenses also decreased as a percentage of sales over the period, potentially indicating improved allocation of resources or cost control measures in those areas.

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Lockheed Martin Corp. (NYSE:LMT)

Common-Size Income Statement