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The Defense News Top 100 data from fiscal 2022 should be viewed within the broader context of what’s changing the sector.

One of the surprises from the data is that 49 of the top 100 each reported a decline in defense sales from FY21 to FY22 (or 50 companies if you count Moog Inc., which saw a decline but was closer to a 0% change than -1%).

That may come as a surprise, but then this is generally a long-cycle business, and the translation of results from local currency to U.S. dollars is also worth considering.

Click here to see the Top 100, a ranking of the largest defense companies in the world.

The Russia-Ukraine war has led to defense spending increases, particularly in Europe, but it’s taking time for budgets to translate to sales growth. Part of this is the simple task of getting contracts let, but there are labor and supply network constraints to work through. The growth in 2022 sales by Ukraine’s Ukroboronprom isn’t likely to be matched by others given its wartime challenge, but European firms have been guiding investors and analysts to expect solid sales growth in 2023 and beyond.

On currency, to use one example, the U.S. dollar exchange rate at the end of 2021 was about 1.13 with the euro, but it was about 1.07 at the end of 2022 — a 5% decline. Standardizing data to the U.S. dollar is helpful, but it also may obscure underlying defense sales dynamics for non-U.S. companies.

Lockheed Martin remained the No. 1 company ranked by defense sales for a 24th straight year, and it’s difficult to see what will knock the company off that position unless there is a mega-merger among others in the top 10, or Lockheed Martin is broken up.

There were companies that, unfortunately, did not choose to report defense sales data, and others that dropped out as result of mergers and acquisitions or changes in ownership. Last year’s ranking included two different Indian defense contractors. This year, none are shown because defense sales could not be ascertained, but they remain factors in global markets.

Russian defense sales also were not shown. Only four Chinese defense firms are listed, but there are likely many more given the size of China’s defense budget. The Emirati firm Edge Group is also not listed. Ultra Electronics was purchased by private equity firm Advent International and is not shown, but had 2021 defense sales of $921 million.

For the U.S., SpaceX is probably in the top 100, and Amazon might also fit, but there’s no data on defense sales.

Given all the attention on defense technology companies, it’s also noteworthy that firms such as Anduril, Palantir and Shield AI have not made the cut, though that’s something to watch in the coming years.

One observation worth reiterating each year is that while there are a handful of defense firms with sales in excess of $10 billion, there are still many global competitors. The top 10 firms in this year’s list accounted for nearly 56% of the total top 100 defense sales, which is slightly higher than the 52% evidenced in last year’s rankings.

Firms based in the U.S. account for 51% of the Top 100, followed by European firms with 31%. However, defense is largely a multinational business. Elbit Systems and BAE Systems each report more sales for the U.S. than they do in Israel and the U.K., where their headquarters are respectively located.

Of course, the Top 100 will look different based on FY23 data, compared to FY22. Merger and acquisition activity will continue, and so it remains to be seen if Ball Aerospace and Austal are on next year’s list or end up with different ownership.

Others may drop off depending on their sales and the cutoff sales to make the Top 100 list. Oshkosh Corp. should still be listed in next year’s list, which tallies FY23 sales. But losing the Joint Light Tactical Vehicle re-compete may make that a challenge when the FY24 data is tallied.

Byron Callan is a managing partner of the research firm Capital Alpha Partners.