The arms industry titan pockets billions a year in federal contracts then turns around and uses it to enrich its shareholders.
Bolstered by new sales related to the War in Ukraine, the company seems committed to continuing the use of buybacks. In their most recent release of financial information, Taiclet said that they “are confident in our return to growth and ability to reward our shareholders over the long run with reliable free cash flow per share expansion and cash deployment.”
Written by
Brett Heinz
The value of Lockheed Martin’s stock grew by 37 percent last year, representing an incredible financial gain for investors in the nation’s largest military contractor.
This spike was hardly the result of changing market conditions, however: the S&P 500 ended the year with growth of -20 percent. Instead, this growth came from stock buybacks. In 2022, the company bought back more of its own stock than in any other year in its history: $7.9 billion, equivalent to 12 percent of its sales income.
According to Lockheed’s 2022 annual report, 73.5 percent of the company’s sales last year were to the U.S. government, most of which were for the Department of Defense. In other words, if these buybacks come proportionately from the different revenue streams of the company, U.S. taxpayers underwrote $5.8 billion in Lockheed buybacks.
This is without including Foreign Military Sales, roughly another 19.2 percent of the total, which are sold to foreign governments through the U.S. government.
When contractors who receive most of their money from government sales issue buybacks, it is ultimately taxpayer dollars being redirected towards shareholders’ pockets. Data from Lockheed Martin’s annual reports suggests that company outdid itself in 2022, offering its investors a record level of taxpayer-backed buybacks equivalent to the prior four years combined.
This isn’t a new phenomenon.
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