Lockheed Martin (LMT) 24 Jan 232022 Q4 Earnings call transcript

Good day, everyone, and welcome to the Lockheed Martin Fourth Quarter and Full Year 2022 Earnings Results Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Maria Ricciardone Lee, Vice President of Investor Relations. Please go ahead.

Thank you, John, and good morning. everyone conference fourth call. welcome year and to earnings XXXX like to quarter our full I'd

and Chief Joining Jim President Officer; Taiclet, today our Malave, me on Chairman, and the Chief Officer. Financial call are Jay our Executive

projected a not description Actual Statements considered fact in materially results pursuant to the may statements. forward-looking that for of our provisions see SEC that those press factors made are safe today's are differ differ historical harbor made those and federal in call results and some in to the the release today's of are may forward-looking forward-looking statements securities Please from from actual the of statements. filings cause materially laws.

address charts We our be click to access have Investor website posted include on also used website charts. Please our charts measures www.lockheedmartin.com follow and to the at comments. in during supplement our that These today the regarding plan information Relations view and non-GAAP call call. link may to the today's we on that

like to to over Jim. turn call the I'd that, With

Hope as and results, business you all on XXXX. for morning, area fourth us and for everyone. earnings I to you've year, our Maria, Thanks, start joining had a thank XXXX quarter our outlook our we the new review good call good and accomplishments key

had and Martin Jay review Lockheed the will I'd like a strong to from detailed begin with XXXX. a manner. few then and the financials highlights from close the year, quarter more to in a

profit billion earnings met $XX.XX. sales $XX resulting a of year in our $X.X of business expectations, and areas operating segment XXXX All exceeded or share prior our of per billion, full of

for the prior backlog year the came Lockheed billion Martin. also free orders by $XXX in for above to flow expectation, our Our increased record driven billion, $X.X all-time cash of while year for

Our IRAD, billion company. new and included or than more investments, for a of watermark financial $X.X research development independent high the results

to reduce our efficiencies to also increase streamline costs. continue modernize and and operations We

to business investment to operations from or By in One speed and our our transform ongoing Lockheed to model-based and our our our market include projects project our what of implementing Martin cost and tools our call use enhance competitiveness. expanding transformation systems is processes in This internal XLMX. capital Significant engineering digital we new end-to-end. multiyear

couple In a our systems for phase system then of we'll detail the configuration maps design the complete XXXX, we build we next and the and it, with new detailed that implementation years. completed and expect processes. to majority for design of XXXX, to And go business road the transition over and

investments our via XXXX billion delivered billion. customers the capital IRAD we and a and share $X.X capital From $X perspective, and of approximately repurchases our dividends and capabilities need efficiently of return billion for to shareholders effectively $XX accelerate those These operations meet to needs. in

accelerated quarter entered shares fourth agreement the million During billion $X into so repurchase specifically, a that under program, retired share and we've we X far. approximately

and ending to flow deliver authorization few XX%. financial remaining growth with with to our operational results investor. the per expect a next $XX the the you, to share of over significant billion We return focus for our our consistent of free year total complete These created value shareholder years, shareholders, cash repurchase

budget. $XXX signed $XXX Department December, budget. on DoD-based billion 'XX XX% late I National the budget. into approximately will the bill for In including of both for defense This billion and law, appropriating for now the or growth spending touch year-over-year reflects the Defense, briefly Congress DoD-based Omnibus national DoD, FY Defense,

increase President's X% $XX or a budget DoD. The request billion law represents from for also the

received positive for over drive other to up production $XX XX, the CH-XXK materialize option this growth starting XX. future, and the that Lot XXX These growth several appropriations Martin XX including F-XX XXXX. longer including outcome along the term, and Lots the outlook the to We enabled in contract the delivery Office, expectation programs FAAD. C-XXXJ, the us, Further, of will in billion as Program and is for finalize funding our the with rescue to the Joint view previously of for funding Blackhawk, we necessary combat levels for our helicopter, and identified, current Lockheed

of four now in important to new were programs Let's signature programs With in turn classified the awards. to several our of quarter. growth record, regard developments hypersonics, pillars: activities key and there programs fourth record,

a received well. to produced XX, authorization U.S. On and U.S. be ago, the aircraft of aircraft as Marine and for Force, definitization first lead allies Poland. Belgium, procure long Lot the F-XX, We F-XX to mentioned the Corps, XX items included minute as XX the to Air Lots I for F-XX Finland for Navy

formally selected the also aircraft to the welcome sales became military And Germany, country, We January, foreign fighter fleet. Canada country ninth operator in program. F-XX officially F-XX earlier the Lightning II its as an to the aging replace

flight to in XXX We pause suspension XXX and engine the and issue the XXX of engine in XXXX, December the XXXX. the just in that of in continue of temporary by shy before delivery to of seven expectation Despite ramp expect our F-XX began operations resulted was deliveries F-XXs corresponding discovered. to deliveries of

full production. program quarter, production its initial deployment supply attests milestone beyond to in chain. instills important achievement to the Sikorsky's our this confidence This and long-standing authorized Marine diverse Corps with Also And the proceed Stallion allows low-rate stability King the domestic heavy-lift Navy and the in U.S. U.S. helicopter and enter phase. partnership CH-XXK rate the to then

will UH-XXM year. addition, fleet. international current are multi-role for In expected to demand its helicopter helicopters announced Hawk Australia this XX remains the replace Black to Sikorsky, Deliveries strong. the begin week, for at Black Last it Army Hawk Australian acquire

NASA's moon. test, the to This person of the us foot woman X Martin Orion one class launched step successful completed XX-day ARTEMIS California. exploration takes off first Lockheed built closer the spacecraft on setting mission Further, down flight and coast of the and a color slashing on first

miles miles the stages and with from deep of the under to carry farthest look forward million designed through It total X.X than additional space contract. from and more traveled home for records distance a traveled Orion program spacecraft earth to next missions journey, its We the surpassed On by seven humans. XXX,XXX distance.

to Lockheed Response and conducted This hypersonics. meeting missile, Air greater its than for of speed In December, of sound. Rapid of Missiles test including the objectives times and test, the U.S. Martin speeds Air-Launched prototype hypersonic-boosted successfully the reaching X first a Force the operational Fire was Turning Weapon. full Control of flight a launch all the

we across XXXX in business and regard successful year-over-year. X% classified With to programs, multiple achieved milestones areas grew

several in the outpace classified We will continue over years. the of growth rest that portfolio to the expect next

This NGI, Agency, In late awards, new make tools, Martin's the development first on progress. workflows, critical the flight we of software delivery fielding. scripts to The was NGI of announced focused path Lockheed software Interceptor, the testing or continues for XXXX. remains and delivery environments. first competition And flight delivery and in step to the forecast Next-Generation process the is Lockheed the framework Martin Defense providing for and NGI for a at ahead Missile a package October, program finally, schedule of with

to best by were FLRAA, action. the With U.S. Range we determined Aircraft, formal review, Defiant Sikorsky we protest behalf disappointed on or And course Team Assault upon the regard of be the of Long decision. to in a Future Army's competition,

criteria competition. aircraft manoeuvrability We survivability and speed, this that and continue believe the Defiant cost-effective selection meets is that with most the best for to X its range, transformational increased

Sikorsky component be Attack initiative remains Future competitors that's expected the in which one of Vertical called for awarded Future two or Aircraft, of to the FARA, other XXXX. the Lift currently Reconnaissance is

only a amazing, and completed ago. complete the XX% over is FARA down more Beach West RAIDER, already prototype which with at I than company testers it months technology acceptance its RatorX-competitive aircraft. SXX is first the XX% It's Sikorsky demonstrator Palm has saw hours. The representative XXX of flight few has more a than fly done.

the In TPY-X X three November, for our and first Martin's going Lockheed target software-defined eight that RAIDERs to the additional TPY Norway in diversity RAIDERs. became with outperforms It's detection, for customer receive mission first radar new options transportability. of is international Norway radar.

Martin. X.X area at strong across for Lockheed with for term every demand Finally, longer backlog the at ended increases business XXXX growth book-to-bill signal and well over our $XXX times future billion bodes This in company.

pillars us do integrated capabilities face we to here. environment four apply geopolitical will everything as growth we mindset guide and these and challenging a So

threats progress drive capabilities our in ongoing in continues and efforts coordinated will customers. unfortunately, Security of our and service military All territories, Operations to conflict As and for global to Domain advanced enable projected require XXst vision these acceleration protect Ukraine, threats Joint effective allied Century the our U.S. the defer

power for Cloud, In entity the the intelligence Microsoft commercial advance military leading make digital platforms; strategic to for innovation Defense. we're Martin quarter, to framework Microsoft, such in Lockheed inside Red fourth announce independently to technologies whom cloud the era agreements expand for IBM's the operate advanced first artificial the cloud Martin classified of with new Government and and help industry. Hat, companies, secure a to ushering America's going with latest non-government Microsoft's as Secret opportunities Lockheed we will on continued Department of Azure

is look demand Martin in we ahead, platforms As States abroad. the and for Lockheed strong systems and United

We continue as to in level same expect XXXX we sales discussed back about October. the

return signature XXXX a growth chain line continues the and programs program our top recover and sustained expect in to grow. as diminish to our mix, in continue to also beyond We supply headwinds

business our for outstanding XXXX you, our to we share in its company as commitments country our well cash cooperation key shareholders. real the among corporate challenges. systems and of resulted as our teams focus lot per Free world-class accomplishments areas as to deep our deliver flow from is year across a functions will for them better develop, a of produce great achievements a remain of and The maximize and allies. dynamic of returns face our

of members a this team share. values testament progress the dedication Our all is XXX,XXX we to year and the our

off to join your on Jay? let we'll with and to to you questions. give that, it later the more me So hand financials, Jay color answer

XXXX good you consolidated will area business first and Jim, full our through and morning, additional results a at I XXXX, detail offer everyone. walk look for Today, guidance. Thanks,

along posted web today. charts our we highlight As our follow results, with I with the release earnings have please

levels financials. our and as not an solid XXXX turbulent Let's begin up quarter highlighted managed to inflation third overview effectively with X% consolidated and well in by sales XXXX, year disruptions seen a a in by fourth Chart followed chain decades. with three, a the COVID finish Martin impacted quarter supply growth Lockheed as strong year-over-year of

mark-to-market we earnings incremental while investment also Besides within RMS headwinds and for restructuring segment flow, cash portfolios. expectations to per activities exceeded our tied sales, free profit, share operating and in all losses absorbing our

ending We also to of an billion. backlog XXXX, in orders $XXX growth resulting in booked XX% record

our positions solutions, security in and on Space investments booked such our Missiles F-XX, In deploying And returns enhance nearly addition reflecting and stocks approximately making for to we by we billion industry-leading our and repurchases in Fire programs businesses. orders and as surge U.S. experienced replenish globally. where in we new classified billion a in on to boost security shareholder share our interest demand $X.X in orders, to increased $XX dividends commitment significant to delivered through shareholders in while Control,

employees and support environments Taken of together, perseverance perform our expectations and demonstrate these our beyond. challenging to results the XXXX in dedicated for

additional a by the award nearly $XXX communicated year and originally partners consolidated coordination look program reflects Sales timing, as sales with all year-over-year Chart to across strong schedule recovering January. on results was higher X% performance we Taking four. at drove well million, four operating performance guidance sales broad-based and limiting last favourable to closer and expected came material drive full to areas which in decline and throughput segment stronger-than-expected essentially business had as the profit supplier with revenue. some than The

profit lower finished settled than driven net declined million at margins $XX almost based the operating favourable higher expected adjustments. slightly profit on also year-over-year but Segment by X% higher and expectations year-over-year versus sales. XX.X%, Operating by lower

as per share on from share earnings grew overcame lower segment from repurchases Adjusted year for the the profit and headwinds FAS/CAS earnings five. to Chart Moving per income. X% pension benefit share

$X.X at $X.X flow cash CapEx a times to We on of the year billion almost six. Chart depreciation. ratio investing of free for delivered billion Moving X.X in while cash flow

maintaining chain. accelerated of payments supply the resilient our We our nearly a suppliers, year also to with billion commitment ended to $X.X

leveraging XXXX anticipated trajectory noted of and year XXXX, earlier, XXXX investing and while in a represented performance for I beyond. cash sheet we our to returned XXX% still As our of balance cash in deployment. In significant growth strong free total, flow shareholders

Okay.

the classified programs, Chart Moving sales X% driven increases by driven adjustments on Aeronautics grew Operating lower profit year-over-year to seven. starting profit and by more Full by increased of segment our offset X% with higher volume. offsetting impact production primarily lower volume. net year than in favourable results the partially F-XX

XX%. grew year, at backlog the For Aeronautics

the value completed highest services that Aeronautics F-XX combines and cost. mentioned, production performance at secured while volumes Lot proposition XX a As the affordable the through negotiations XX with providing

Page sustainment Missiles the profit on X% decreased was Fire Control by programs. PAC-X. and along lower on profit volume at driven Looking lower program favourable lower ops our volume Sales following Segment withdrawal, adjustments operating eight. with special with on down primarily sensors on primarily X% Afghan

the on back For missile the backlog year, increased tactical of X% strength.

Mission decreased in by non-recurring X% on the by volume at event At year-over-year Hawk Systems profit primarily Black XXXX training and Page in Sikorsky. Rotary a program. following profit nine, business Sikorsky along lower favourable Operating and revenue Hawk with CXISR Black and CXISR adjustments volume lower and sales on decreased X%, our driven

as multi-domain well air of stronger RMS Guam orders. X% missile award, be Backlog lead where system the integrator Sikorsky defense the grew in the as of and led will by XXXX, Defense

business and space. orders. to net AWE national offset our profit program, partially decreased based program a Operating strong XX Turning Space with earnings from Alliance. renationalization decreased program on to X% captures Sales classified of in Orion by on profit adjustments, grew the offset higher XX% partially lower Next-Generation Backlog X% United and Launch security by area. XXXX equity due Chart Interceptor growth the

So a finish all year. strong told, the to

on XXXX to shift now let's XX. So Page

Before XXXX. in starting change inform introducing operating like in reporting segment of profit I'd you our expectations, a to

our report earnings, will was profit. unallocated asset in expense We included Previously, believe intangible intangible will impact amortization not profit. in performance our operating total change expense we below business segment corporate of operating four for more impact a This the on expectations, XX is impact and segment purchased amortization in accurate each operating provides approximately areas. points The view consistent of years. XXXX change previous with basis the

as of includes you outlook earnings adjustments impact change, can charts financial this the in in release. well our supporting and web of these as XXXX appendices Our the data find the for

XXXX. outlook the Okay, into let's get for

billion continue below in sales range the and expect is to be $XX We midpoint to of slightly $XX the billion to XXXX.

sales Speaking year, up quarter timing quarter ramping quarter-over-quarter we our of to of be the lowest first year, the XXXX. in expect we this as the to did

for $XXX It's improved impact we from headwind transfer profit October. thought has XX.X% we of margins only operating currently in new in from billion be intangible to for normalized reporting. what million basis segment estimate excluding thought operating expect lower Segment -- under XXXX in at from income amortization now what XXXX And we XX estimated our 'XX, asset with We pension XXXX. transaction. $X.X of the roughly FAS/CAS our points

$XX.XX per driven to for Our the reduction earnings share is expected FAS/CAS to the $XX.XX a between operating and EPS primarily lower by count. partially offset from by segment benefit be 'XX in share income, adjusted year-over-year lower with profit

R&D is estimate $X.X Our enactment equal than billion for free flow XXXX cash assumes the of to greater continued and capitalization. tax or

combination This in lead focus higher of of million growth our $XXX This share a on continued billion, in a increase of count share another repurchase along XXXX. increasing with to flow projected and for share mid-single-digit flow cash cash cash lower share shareholders. per our per highlights expectation free cash flow to generation, guide our free $X free

We Okay. all -- sum Chart XXXX XXXX which On beyond. with robust and a in out have on let's growth XX momentum positioned it us resume closed strong well XX, to Chart and finish a with operating up. backlog,

increase balance cash repurchases. strong returns share with also our significant a We shareholders increase to a premium placed our to generation and cash sheet leveraging on to

actively ahead drive demands breadth will customers Across to to growth mission requirements with and all meet future. the foundation we production four of their business performance. continue increasing areas, And sustained and looking programs and high our sustainment our development, a of to work

our growth, Lockheed efficiency technology strategy and improved across and advancement are Martin. synergies aligned for with investments Our value for

and is in believe shareholders. So well business positioned for for long-term we closing, the growth creation value our

let's the call John, Q&A. open that, up for With

of David Please [Operator Instructions] with go ahead. And first go line the Barclays. Strauss

terms and you programs Good Thanks number Could specifically about, question. of flattish morning, the have the in headwinds for I taking sales. highlighted of Jim, that mix to what you terms reason quantify for you that headwind everyone. wanted you're in the 'XX the program your ask at? in is what looking is you

then ops were 'XX as anticipating that follow-up, you've change came it reacceleration amount better low I FY How now? in, a think, on might than digit single to plus the quick you growth And the F-XX said previously and in what budget fair with a C-XXX. than in Is XXXX? regard better Thanks.

four and the me second continued part in just Jim XXXX, XXXX. we've But pillars, record when of mentioned. So take what's and David, do let unique really specific over you question had your 'XX talk to our at we got kick Jim programs the XXXX, an have items really and in different growth context to you one and going I'll first give in of some it, In example. then be of that the look the to

example, For in aero.

mid-single-digit material On expect the the in we had up are prior a that deliveries production we also to growth But F-XX, sustainment as decline we catch continue on in purchased in the mid-single-digit to expecting years. program.

Similarly, on to F-XX. on production out reduction programs our backlog, the sustainment growth are we going to seeing modernization but in we're in see the and F-XX, continued roll a

sustainment going which particularly to of into will So growth allow no those in production. in for be -- headwinds, continue both XXXX, they and normalize as those longer on in XXXX will the F-XX F-XX Aeronautics,

little we a in like XXXX it see to we Similarly, and taken carries to some than originally little it's longer where particularly level, we a higher us the the bit record, production bit PAC-X, is demand what of XXXX ramp from things like over MFC, of saw a areas up. in programs expected

as see XXXX. in in gradual as 'XX with operations improvement in our to well going growth internal we're And so stronger chain supply

'XX will 'XX much 'XX pretty flat CH-XX deliveries 'XX. deliveries. versus versus double in RMS, And is At

RMS growth specifically. And Sikorsky Black going right multiyear through probably Hawk for multiyear is We the X now some 'XX also as in in what see to transition well. XX we're and

all think unique that 'XX, and will those XXXX. we are that headwinds from So are things lift to really those are relative to 'XX

that. with really as geopolitical U.S. and the modernize the budget to as hopefully that situation the forces the Yes. out, fact it our the that's about and defense aligns Ukraine our support beyond the And in threat, conflict to do sad company Congress continue and deter already David, need where of nature happened far in came to unfortunate the view to just in bipartisan allied there's armed

all plan that 'XX. kind would expecting along budget the our and to And of been government reality process FY what meet for the U.S. up geopolitical in exactly the long-range we've in situation. that's Congress the played out step So global of

expect to sadly next exist cycle, also same is for to that even We now -- continue in XXXX. reality which happening the again budget in

don't reality also fundamentals believe circumstances we of is Therefore, to continued see that a changing. as So the budget defense we the robustness the well. going be the

on before me to let Where Just question, MFC. follow really is upside. your not baseline or we up David, in where see were there's whether we at last increases potential

revenue It's And Over would lost that than associated revenue hold. decision more with got the around five next $X billion. offset years, we've should potential. FLRAA that

we net-net, so upside some And over be years. the five could that there see next

Walton Research. And with go to next, go Please we'll ahead. Myles Wolfe

to a a restraint around then, quick one F-XX, as in fiscal debate sort several little of Jim, morning. last and maybe been years. on in in bit. good one restart Thanks, obviously, D.C. one your has one? of there's more and And expand in expected the the allow deliveries a When is place of quick going you

where thing, balance to importantly, yourself ends you you budget as perspective from continuing whatever do And budget back forward, just outcomes in where areas full XXXX sheet think operationally resolution operational repo the do more holding what, XXXX terms curious a anything, so on me, in leaning looking for one if this are of prepare might Anything for I'm -- be for a but year. or perspective? excuse on an up that

Myles. Sure,

mishap production, and of I timing think deliveries resumption assembly continuing differentiate it's really at as we final right? F-XX, production far in on factories and are between delivery as important So the Japan So to order receive in as expected and from and same Italy the at and we occurred. our to materials pace We're before continuing the Worth also chain and parts Fort supply to well.

and of the pilots acceptance factory, an And process. rolls portion is of so conduct kind now That's what's the aircraft DoD hold on pilots out a flights. our the right just handful of of once that

is vast majority XX% the door. greater our when out aircraft the of the much from plant So than rolls revenue, earned

later, So you Jay on happens. color but can bit like, add the financial what really perspective, more if a that's little

the conclude be when far their And supplier the timing ongoing of government and that U.S. we'll so of propulsion mishap the investigation. deliveries, notified resumption as of as

you Jay, to do add want to anything that?

No.

That's You it. got it.

in really the predict Okay. And Congress political the then can't within and -- and with dynamic secondly, we administration.

is they to to the job funding process, which on with So that. conflict expect and what they stay our and fully XXXX of department funding defense, head that end of the and can will right the we're our that plan, deter at acquire going the making occur thing them can keep that other down, our need available to so budget we do do

and our to difficult going of defend now. we that budget process that's done. come they do House, the to us lay But what the Senate given country are administration be expect to and together the nature for really what's we the out the right the get needed It's think and So will budget expectation.

Poponak we'll Please Sachs. go to Noah go Goldman ahead. And next, with

of when in Hi, outlays that that third related, 'XX, there And is tough intertwined supply to the to better? the be you into that see is extent happening? better good of Do quarter, You the dynamic the going into logical you gets half that have look just to chain improve is any comments then underway? your talked Or chain the timing? exited trailing of insight that still what's we've that through that already morning. year, anticipation insight that was incremental in And this that. a on that expect are supply about possibility but is declining. the where year kind the Jay, first the and getting in authorization

Sure. Good question.

a And to on-time of at in up. quarter piece this here triangulate delivery fourth the what me number straight second the third. looked We tried at saw we to follow ways. and relative we part performance and just different the Let in looked in

We and systems. didn't performance relative meaningful metrics, program value-type change delivery performance, on-time see our we to at looked so value a earned schedule also really in earn or

for But is that timing, year the what quarter adjust will some also and a quarter if say up in requirements saw fourth of our you requirements. we you of balance weeks fourth the step-up the these I sequentially had by in to significant number adjust benefits relative the of for And in about in quarter award terms stepped of fourth the X%. the

say was chain, whether to chain, the it's increased that requirements. level I operations our internal And the of supply meet and would entire able value

So expecting to as And assumption I for a improvement reasonable think a that, as assumption future me, in well that that the to bodes a just provides well reasonable gradual XXXX. and basis

ahead. And Please go with Research. we'll to Shapiro Shapiro George go

morning. good Yes,

probably a years charge classified a same incremental program so forecasting look you decline on that you was reported slight rate, stepped F-XX. going that margin a aero, you're then, follow-up, forward you the you a the sustainment program, assume versus million large profit at of $XX couple was growing F-XX And took you the program I margin charges And the the like in If the the quick took ago? the Thanks. in XX.X% in that that about up reflects production.

Okay.

charge a I -- to your color can the there. I'll that of we yes, bit I program. one take now little but took, with answer you're probably correct, the maybe related was George, questions on So provide the

where is And continue job is program. a some learnings our that We have to see I great But a there. you and continue think, to Skunk have this doing team, program managing development Works in learnings. you

profit But And I far things, really benefits some in we of we've did not the the think we augmented F-XX by was -- scheme you're quite the well. well And but net as program, results results. as impact the did board. see Aeronautics, right, -- and only And our grand hasn't managed as there. it volume the it that the as not adjustments there in at across quarter, were the were

we there. margin, there's little headwind I year, yes, as a think of about next the a think bit

does in in adjustments. bit as company year, to planning George. little mix part think this profit be But play favourable for I now, the about lower profit entire of right we year, Lockheed as grand a and scheme for Martin, in a we it expect we're did well for profit for somewhat 'XX. question, the Thanks adjustments, net that XX% similar the of would the

next, Spingarn to Rob we'll go Please ahead. And go Melius Research. with

morning. talk that and recent Strong program Good of a are little bit? be position everyone pole to that your expect Lockheed's hypersonics. you be Can as as in portfolio offensive that about we counter I Jim, would hypersonics What efforts got agree interested the in in there might some think think a successes. I people might well growing portion the budget.

what the pole hypersonics, But can of products say also the is you elements lessons got apply at on speeds. Rob. faster a already a of travels them we've I It classified, in, position we're counter heard, right? take a largely incoming existing it's we many And and lot to from can have learned of that we Sure. engineering as similar missile. and NGI, is target, working ballistic right? which So just So the a

We have will, we lower-level have accurate And the is further FAAD a a of as very well. which system, interceptor a if in, which systems. is defensive high-altitude PAC-X, sort then you

So counter go coming we systems and the got process X need. applying data are elements the which, them right? lot that the developing we many Mach now information missile, right these in what will network XXst have to like concepts on intellectual you in of of we're hypersonic much what together Security on integrating developing we've working We've course, And intelligence to engineering got think the Century we and artificial quickly, So property. process more the talent. solutions, need I we a and have a eventual of into that

Our Safran Research is go Partners. Richard from ahead. next Seaport Please with question

Jay, you? How are Jim, morning. good Maria,

Thanks. Well. morning. Good

it's just move made touch the F-XX improve few expecting expand ask So I what U.S. you on the they program. you're given a about like international maybe all like things the ago. expected should set I if the ahead, just pretty comment wanted thinking And update and thought decent on rates. on be done to and cost structure delivery might you the margins opportunity production you maybe was program on remarks to that to possible, the on at moments on now. maybe I'm Greenville the right first

some and is the associated XX, it really Jim. Rich, But the of of which for article the great program. hand background data to Jay over with Block it's off I'll start Greenville. out is quickly the production and news

Greenville was first morning the Block this and really test flight in for for Carolina. organization company that milestone successful, great South The was XX

significant there's meet organically, of collaboration to not or across over co-chair may coming We're with around lot and be authorized Secretary is for in guess, with I moment world. a the allies be may month actively F-XX theirs going the out CEO infrastructure or of this future. for try U.S.-India at CEOs there to Raimondo. get from those. those jet I'll it, maybe Also, from we're yet have aircraft. not countries But A marketing call the this so this in to going. of the but that I with Forum going India and our one industry a team demand

specifically And example. primary one of the is would say, I India, F-XX, for which is in for designed endeavour that F-XX the, variant opportunities

coming tell lot but anything to sale F-XX, we marketing a have to of add? you haven't out demand existing, either new from the all we level, yet, way can order want Jay, So or I ones. and customers we are in my that up made you organic

Sure.

Just color. maybe bit more a little

first today flight, Just the congratulations first had that flight the on successful Aeronautics there. to top team we our of

over have currently process aircraft production the We in are XX phase. in that

say, anywhere in year, between, significantly We deliver this then will will that XX step aircraft and up XXXX.

And on in so path of front that opportunities the we're we that good a recognize us. are

That's aircraft. There contract Bulgaria. have we're combined year, there Jordan are XX that a with this announced finalization, countries hopefully about eagerly few awaiting that and been about

Jim demand, the to we're And we able speak so ramping requirements. deliver as the And as significant. is be pretty customer up to mentioned,

go Seifman Please with Seth ahead. we'll Next, go JPMorgan. to

I'm Jay, look of visible the stuff, there's everyone. question returns I be than the year's FAS to and XX% much income on that morning, tends Thanks was CAS more flow. this discount on cash at and rates statement. CAS recoveries, sorry but But a know it very waste much. pension. And about if to all Good we

next So a and outlook the can us the the over give multiyear recoveries where CAS for you balance stood year-end? few at years

this I about cash decline we as year, will Yes. this -- year. $XXX mentioned, said so mean I million. for that

next the $XX as decline that element the We'll well. by see decline over bit -- the years CAS a more by Specifically, will little about few million. recoveries about

$X.X And down the the I billion so come $X.X it range, around over will few think, billion, in years. next

And so have outlook that's today. the we best

a volatile. -- As fluctuate and you know, do things these little they are

XXXX, we that and we'll go So accordingly for think that what update next year means Seth. as and about

Peter And Arment next question is from go ahead. with Please Baird.

Missiles Yes, Fire Jay. thanks. just Jim, on Good morning, I focus Jay, wanted Control. to and

to down XX looks obviously also kind of a like year, to but close be going growth basis points. profitability Just in little transition this

think little bit of kind this there we maybe next all through a Thanks. puts margin as years the got inflected? just couple takes Just the and about about of of kind of walk and where some recovery we've thoughts us growth

will to those No, not as margin it a year years we take are next the well. the into seen question. few time And margins bit It's just pressure phase just is really on talked of head particularly beyond have on some past. the just We've that to these Yes. we programs program restore but little in that something and got This low we've new in awards, early classified, to third as production. a it's margin, going call. quarter good that put

confident with. deal there. the And able pressure MFC will there take the business. get a that that look, some help have they'll upside is of Those in we're to potential more seeing that will mix with driving programs. that margins few mentioned some has come I'm over record the a will in team reduction future do billion be margins. five But there well, benefit the seeing of we to that a have offsetting the to out but solid mitigate do say good cost, this years. new as What I next on years driving with track it we're I the be $X we will will before these

Next, Kristine Stanley. go to go ahead. we'll Liwag Please with Morgan

Rocketdyne, a capital, tighter importance mean high-growth technologies? different to Lockheed looking for in think should see from valuations could corporate topic. at M&As how I double With everyone. deals Maybe morning, Ventures about into investments. Martin we VC the gears better stance the cost here? with access a we come just we mean And of switching that seen on enter the of FTC Good new these from we've time this to on terms? down limitations ventures Is to I attractive Aerojet saw

this Kristine, is Jim.

looking when as was -- Board double, the funding. right? $XXX venture actually, came it So very $XXX of said, double management was actively million, actively you fund, to to invest the I additional I We're that first did the million. now to things to from One active it's

to and though, In emerging it's our the industry. our to discover earlier of be in that really otherwise can technology and for great utilization that and products scheme a it of develop help applicable than our to perhaps designed company, might strategy have the way kind systems that technology

development get operations, of venture production of our So systems. and benefit out in actual we fund platforms the and most

had or have investments indirectly that. the upturn a We they're just those nice doing not results necessarily well, prospect but they're of growth ultimate company, the the of ultimate as in driving valuations but the

internal a new interoperability, our on technology and that All to mean pretty areas autonomy, these with intelligence artificial maps. Domain mean will I pursue alignment it's drive capability targets accelerate and Operations a that great Kristine, other add, just point. our like these Joint the we've help we organic us I got emerging examples tight technologies. are I'll road And

certainly so And there. point. opportunity a great it's There's

availability of funding As Jim our we're increased we've mentioned, opportunities. for and those about excited that,

with And go next, Suisse. Scott ahead. we'll Credit Please go to Deuschle

had on if morning. you've beaten you whether just disclosed this with position tax to approach guess your I government taken on the I back know peers. broadly, have of this going Jay, different a of has in curious taken. you've agree subject XX-Q. tax bit this recent the been they're conversations then just you some good more a R&D guys I'm And And issue than approach uncertain stepping any the had with to Hey, death but already,

Just of much. that you might Thank give so when you sense think us kind for get a resolved?

Good remain We Sure. dialogue. no had taken. really confident question. in the we've position that We've

are contracts We the guidance on from specifically would be covered. awaiting what IRS

different We a you taken is You're position. positions. when cost-type is those the risk We have services. And under different in are there confident risk provider our the factor. particularly believe right contracts, remain that by players that taken no of

to any really Secondly, that benefit contractor is of and we can believe that that technology or over the work at in marginal the it time. takes the the is one owner others because point transfer

And are legal we sound have taken. so base and those think that we arguments teams that by that sound in a we've supported position

But again, and position tax reflects really it's -- that our uncertainty. uncertain uncertain

the you, it terms I researching lot give and yet. we because the we've as time way come can't of time don't we position. know it, can internally, just discussing that position spent of So specific tell out a or one you this, But lot of other the in a is right think deliberating positions of IRS we I

Research. to And Rob with ahead. go Vertical Stallard next, we'll go Please

a cost Jay, any system? seeing budget boring that any going itself it Are flowing inflation morning. ease from resolution? Or signs Good FY question was mitigation inflation there final 'XX to much. for through starting works be inflation as so you to Thanks the this is for is your that you. through

we Rob, seen really the are with contracts In on because Yes. all have price a is fixed our fixed price many we that really we contracts, of is not mean I contracts seen our our -- to where something some suppliers our time. have to only significant impact, requesting evaluate existing inflation under adjustments, those we suppliers us. where price the is we've got And escalation we proposals as ongoing with price inflation well. unwilling commitments provide are economic have industry what as that impacts, new clauses, longer-term are customers refer which clauses. you've seen in Where dialogues

suppliers, quite really still that so squeezed to we're some some we side, and often accommodate review To these type into because an where you're reduction that agreement we're have with there trying you, type on any honest with or it's to have the both have an getting inflation back-to-back we seen ongoing grapple you here. something well be And to requirements as of assumption to of the in proposals, either it's new haven't can that issue. as our going you customer make we something in our proposal type your and we with on inflation And price It's have clause. sure proposal pressure. with of

Markets. Ken Our next Please with from RBC Capital ahead. Herbert question is go

Jim Jay. morning, good Hi, and

around at around that of current significantly as impact award about a Just out needle specifically other awards, new the we award maybe there NGI? other NGAD wanted on And and to some here aside, ask the you outlook. question think the Putting new if 'XX? timing opportunities, move side look could FARA expectations programs the on into NGI, are there sort the for potential what's

know missile -- -- do XX We few production order we've mean us XXXX. It's the something a got -- have we're you I program. have that large Lot program defense waiting a -- it's the on for in of about an so year. think these, this that for the missile You and international we important F-XX, air expecting program

probably new we growth the And included back four type of of so decision. year is That in our about awards. it's half of pillars talk when

would There tail in are the year those And as of at expect awards to around next programs that well. but this XXXX. can't down-select end year here into detail are those, of made into be either we really to kind NGI, classified, get expect of we the or other of some

Jim XXXX, us. of in a That's now, there's so there well. some in decision a markers And are I these that out FARA. really just spoke mentioned that between to amount probably as important fair of programs certainly XXXX

with Sheila Please go Kahyaoglu ahead. to we'll go Next, Jefferies.

you about in for and bit which segments, of expected your of Thank we biggest forward, do think think your little XX your we talked about morning. the a this margins your MFC bps variable? the should of about is challenges came there. Jay, than you range and the Jim I higher. anticipated profitability And When going Jay. think better Good of You some guidance expect? the is for sort XXXX time,

if that. maybe So could about you talk

Yes.

to in of a the Lockheed talk to the we the outlook. the Martin margins those, history longer-term look And we've XX%. to years, probably potential back bit and last range you have over time. in Let five get me will kind at but take do that reached I believe XX the maybe of of

over the three the term, would to hold or where the I just these are next of years they some In pressures really, because say, objective short margins will our so, be particularly on one really a MFC, these you've basis programs, one in year when to that's at in XX BA, point from reduction -- lot new got see we overcome. that a

cost think worked the overhead both really next margin that deliver that's are we had we key cost the internally: to re-crank get have our to really message where ourselves the few as where I We've reductions XXXX growth. to trying that's cycle, track to cycle. far growth we on years reductions, profile. maintain product the maintain in growth drive re-crank as And the is let's things be really as and we're internally over But going try to

As that then around and able to on back turn flywheel we be focus start and we'll improving margins turning, get margins.

from ahead. go Next question Doug Please Harned is with Bernstein.

your how with -- get when does is you Refresh also as might restart, And Tech really ready when add-ons also Should Refresh the those to these on, so got flown refresh XXXX or into talk how now there the F-XX, restart Can comment you've Tech airplanes deliveries? that progressing? Lots On we XX tech play see X XX? get you. you about upgrade. you've Thank been though morning. F-XX And here, progress that's already how plans to through for X perhaps delivery produced. you Good upgrade you have progressing, the

question, et turn to over it then of So me and your second the first portion Doug, on for piece Jim, the it's numbers, cetera. Jay delivery let take

-- the So of aircraft weeks got Refresh add in Tech capability thank That's the couple a software just was few and you next couple X we We've and of mentioning year. months. in hardware the of more over first the really flight releases to expect upgraded We're our production during expectation. TRX-capable ago. this TRX hopefully accurate of in course to And for going go. software this But you're important dimensions. a with is literally

capabilities. that does of will more Now It to two itself. the to more for is be accomplish capability and really the what for aircraft will us dimensions. strategy able be One upgrade warfare will is able major electronic It customer kind the of be our missions. and It for weapons. able handle to

going basic alone significantly the to this of itself is the by aircraft of be functionality by So elevated technology. the insertion

updated It's processor. core what this an technology? is And

how going is see, And So the be that they the it the what then modernized improved. around the vastly aircraft the so it and they -- to with going basically be the systems it. to interact carries pilot, for server for and jet airplane to other the with upgrade. going is with data is next-generation display The storage

power right? TRX connection and system all multi-cloud with three So edge aircraft things, interact systems you pilot of and interconnect the a the the other and three and with to The capability in for need data characteristics going the better have right, storage things Internet other along storage, for architecture, because they're processing are those capabilities that of an to modern XG basically of data compute speeds, Things processing modernized capacity, node and are ability speed. a to interface to data with

actually to kind much role. with its two in capable more the birds with here. aircraft going traditional of one is be we've hand, the TRX On stone killed So one

to sort what way Things capable, On calls of Joint uniquely more the our All-Domain future, it's network That's Operations going of that. or in customer Internet perhaps right? of second hand, capable, be the the

Security to the capacity One and itself; open second, open architecture. computing super pieces now And and important. They're architecture concept. of So that's with ability network aerial of really aircraft F-XX, the airplane our of power component to the architecture have is Century central systems an serve other we the IoT-based the two and its TRX. as sort XXst in

you do want that? to Jay, to speak

on that necessarily question add-ons, but -- answer To be occur not the XXXX. will -- in that will Sure. is

to you hardware aggressive software If going which is introducing in cutting think and right program, now, pretty be production, new it and about full production schedule. a we're a rate on

and expect included its sustainment XXXX -- so I F-XX. our projections, growth mid-single-digit on retrofits And revenue beginning time. And growth see of our over and the part in maybe this sustainment beyond, the what sometime the probably is that start fleet in and we'll on will would existing

Please to ahead. Wells go Fargo. go Next, with we'll Matt Akers

And ask, Thanks for how got and orders for had is some that of me I might be in of morning. maybe the we stuff how accretive How there. squeezing I should you in. think Ukraine of Martin? restocking that wanted some the and timing? mentioned growth the Lockheed And beyond? 'XX sort you've to big about think Good

Yes.

my I sight We'll again remarks, of as see and to significantly that $X.X we'll about got XXXX. into mentioned carry over So some prepared that of will that orders got orders in about more outer start had we've years. billion. XXXX, -- line we We've beyond delivering on of the in a in that,

be And determined. still so to it's

customer meet say we our ramp we and opportunities we higher that had making all of funding those, can are have it's is investment contract ramp all can what the PAC-X, are internally are making from But to that HIMARS, today I and higher funded drive sure the make we whether that and GMLRS, projects rates. where part rates, to of is

Jim. it's Matt, And Yes.

issues we defense, to to One the A, ramp been for and the you that able bringing illuminated with have has enterprise this sooner. situation to production would revenue national production that faster is have defense need in the accelerate of when the up liked B,

just it's work we that So talked maintain two quickly highlights I industry an an as and conflict about. need, together the relationship we've to government effective think, the between it evolve to the with so urgent deterrent one, and can

like we and the that we relationship officials double discussing can things I'm receptive, if of right? we we and government or single-source have they a multiple industry, of the of some and leaders components with in down concept have triple what materials can to there sources system. ensure are So their who reliable the supply of government the the of this go who our are output is So have anti-fragility key thought that back out so of components between lot meaning government triple senior or now, and and several on into double to chain production our components, find apply

capacity concept call time in piece of anti-fragility production have X it, Another this deviations invest us, the above is mean with government production to standard the peace rates.

or So speed up if faster. quickly the you to much can and up accelerate, the need line line start you

the is contracts we less year-to-year, expansion supply of a invest so fluctuation in the predict willing have base use our can't don't of they demand sets one multiyear which Another to future. to again, and long-term have that significant, because back,

that on participate in working defense that then for and while Martin government those compliance and see the And businesses, base can like companies what defense burden from we're and negotiation burden that it that, small needs. funds medium things prohibit suggesting really a provide truth the and government cost or overview companies other burdens really a perspective, and Lockheed we that that broad from to major of oversight other medium with at like the act, industrial of an to are an finally, especially it's ease, us would small working and and with take overview compliance audit certified

too. of So we're to to that are issues raised government great going raising these other But there's an important with sure issue solve. issue I'm a dialogue work companies restocking this beginning. industry try to

is Great. Maria. John, this

of for we've think I here, the hour Jim back to I'll last come it the so to thoughts. any top turn

ensure year they've the XXXX to company call to globe. in like remain Lockheed technology thanking our I'd what safe of and they'll we positioned discovery Martin beyond. ready edge Maria. of do for customers advance and community keep and our today Thanks, to done the ahead entire around continue push Great. conclude the our people to the scientific this by we call and everything Together,

the We you joining day. for in forward the everybody. call John, a April. our look to Thanks, today. again call great on next with concludes us speaking Have thanks that So on call.

does your Thank your ladies participation. and gentlemen, for Thank that conclude you. conference. And you

You may now disconnect.