Lockheed Martin (LMT) 18 Jul 232023 Q2 Earnings call transcript

Good morning everyone and welcome everyone to the Lockheed Martin Second Quarter 2023 Earnings Results Conference Call. Today’s call is being recorded.

At this time, for opening remarks and introductions, I would now like to turn the call over to Maria Ricciardone Lee, Vice President of Investor Relations. Please go ahead.

Thank you, Lois, and good morning. everyone second welcome conference XXXX to call. like to quarter our earnings I’d

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

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

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

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

discuss highlights results morning, then Maria. few for our on key us with earnings thank and begin quarter and and XXXX strategic full-year operational Thanks, XXXX joining second call. will a financial you Jay I’d everyone, our Good quarterly today and outlook.

X $X.X record a $X a book-to-bill year-over-year double-digit reached from growth and $XXX quarter. QX page in financial aeronautics of X% up space. from the results of of Backlog billion our on this slide resulting billion, sales at Starting billion were of strong, year-end $XX.X with level and up both

XX ramp in be visibility into This million us key demand. ever emissions XXX profit operating XX.X%. Segment suppliers $X for multiyear operating of and positioned of to programs $X.X approximately quarter margin [Ph] at our significant awards gives billion to of the [Indiscernible] reflected meet an our up to better the growing Orders an as enables F-XX backlog sales lot for production well of as MSC. highest included option

expanding flow $XXX remain we and production capacity. million advancing technology cash Free was and committed to

we $XXX million of we million flow requirements. QX, company two needs in address funded and invested of Meanwhile, the So to $XXX cash free shareholders. capital times to customer’s our returned expenditures R&D almost and

results are the and narrowing the first half financial year, XXXX of Given full this year in strong raising we our outlook.

the share. expectation midpoint For to billion the of revise our to we’re revise EPS sales billion free to $X of to raising $XX by range and midpoint billion our between $X.XX, per between by $XX.XX the $XX.XX of are $XX.XX we range raising of expectation

confident are sooner and ability these achieve our anticipated. expectations to We in higher return than growth to previously

in the allowing ceiling to supplemental munitions through multiyear included The F-XX enable XXXX rates will growth to growth negotiations authorities. XX budget, defense XXXX President’s us funding. budget that support line budget It Turning defense proposed to request also investment of production XXXX. X% for aircraft budget defense contracting at stipulated debt funding the supplemental Embedded funding in with defense ramp outcome the additional support spending of new FY the under the top FY preserve up the for while state FY for

in our the While completion budget, we process. XXXX there the committee we’re the FY encouraged are steps approval reach appropriations and funding support strong forward to for and numerous full look still final to for by so the of programs reviews far,

in were to formally of the XXXX, of refresh see internationally. We F-XXs, program, both Republic continue technology TRX half demand we and Israel delivered delivered expanding configuration. domestically their add in first by or The to the XX to has expressed customer decided interest F-XX strengthening which fleet all More XX the aircraft Czech XX%. the has On and and F-XXs

XXXX deliveries certification we configuration related Refresh to call earnings or hardware quarter due initially software anticipated acceptance last and year, thought we Technology that from timing. first Three the to delivery and the what During to indicated TRX reduction maturation, in

Our current F-XX view is we expected XXXX. aircraft XXX to to deliver XXX in

our in and change the outlook XXXX execute no future of term is foreseeable longer continues and future, aircraft at rate the XXX to to in delivery supply system targets. production a delivery support there these Importantly, to chain

team fully to dedicated Our first XXXX. TRX in remains delivering aircraft the

May. new in on four update such in electro next capabilities, test brought recent XX release completed the have happened most That and for a We targeting system configuration, TRX flight of successful optical the that set radar. the links, tests different critical as the flight data aircraft in software including software upgraded

and is and release. fusion, of the software TRX world’s and of hardware significant block the the multi In which F-XX processing capabilities. core enable greatly begin as upgrade months, into weeks the memory future. computational to well updates enhance on the will be modernizes testing additional other weapons free is capabilities to among the next and of for predominant significantly sensor many we as track four coming software part decades a power the aircraft, shift the will mission capability It capacity, missions, core fighter as that

the our discuss aircraft, and This commercial fly the amazing that quiet in someday known land. innovation a year are revolutionary tradition NASA California's its to to other over Skunk next our engineering beyond desert. pioneering in and stealth Works perhaps development towards [Ph] and customers. of June. Works goes to the anniversary by example of continuing first the test continues the advancing leading long generation that flight. the SR-XX of is boom just advancing and to with operation of can this XXXXs piloted military to and hypersonic partnership artificial in envelope build unpiloted develop plus XX our prime science supersonic lead X-XX, prototype aircraft feats Works today will in the flights the elegant supersonic and airplane celebrated Meanwhile, the of today that is pace A edge both we three of Skunk time, the high and and the for Mach year continues to exciting technologies. from Skunk with XXth create pushing aviation intelligence beyond its years That’s to we

even himself, ago, and craftsmen, Yes, And our and helicopters. rotorcraft company’s Air Sikorsky team with spirit XXXth in anniversary. York, Igor as of Paris years who chicken his innovation passion of it the Show, in to carry His for the Long he and to culture perseverance XXX the like In has and Revolution. VS-XXX lived left founded vision brought Sikorsky his practical At the seconds. the on XX XXXX, today longer in when Russian its immigrants engineering whom achieve farm helicopter, Island, Lockheed Martin. were world the all pioneering New Sikorsky small many a celebrated ground first reality a of engineers aero company he dream fled on piloted for throughout the

around line Black interceptor before launched multimission, U.S. a This PAC-X delivering a this also military several as Germany in a X of Spain well. We milestones allies to MH-XX aircraft Norway MSC equipment test from world. military launcher. well. perseveres the the H-XX of Department support MSC was Sikorsky successfully family State later letter German helicopters German to signed is and enhancement NATO approved related Seahawk MH-XXR other or Romeo achieve force acceptance air for for year. PAC-X helicopters, X and and The Hawk quarter product modified last of missiles signature The possible foreign sale offer step flight segment the in as a the

Germany. produced rocket also in a system on entered into an unique Defence with artillery to Rheinmetall We agreement be to collaborate

fuselages. And partnership, July, new the and Rheinmetall F-XXA Production This announced is a earlier to in Rheinmetall with in which build partner manufacture a first capacity was F-XX. expected in site expand start chain Lockheed February Northrop between center Germany selected to in supply Martin, XXXX. our German factory to for Grumman

entering the the multibillion Lightning Poland relationship continues In to State the potential Polish Force initial to military dollar the Department with HIMARS The of F-XX with components. for and sensors launchers progress sale and approved addition, PAC-X our formerly modernized Air Poland foreign for U.S. shipment first with also Poland. production to II

Commonwealth Australia to communication as a April, that, the Victoria we’re mentioned relationship the diverse at as excited partnership a advance of of well. top XXXX, the preferred technical Martin as a with sovereign deepening the for helping Australia Lockheed our on prospect and and for our call, of system with bidder On as our for last Force, Project establish earnings continues In satellite companies engineering Australian Australian Defence team military hub selected of Australian Defence.

Origin’s on taking system major Lockheed a Blue demonstrate in and team Artemis role lunar space, landing a Martin to national program. human for develop will the in Also be

surface NASA’s expeditions and Cislunar Our Space Transporter, which gateway will station. space will the humanity’s building enable to first from back moon be recurring astronaut Operations

joint edge of of demonstrated results milestone our time joint It surface. to U.S. integrate domain demonstration a part Digital levels including company’s is digital Works aircraft, all the Control network, XXst integrated XXst major for demonstrated century space help In legacy our we joint Indo Pacific at this JADCX The architecture and operations Martin to military and performed to the into Alaska. shape fires Force been commands both the This scale. Command and as domains interoperability, all control The C-X digital C-X services, functions synchronization during and pioneering this operation Finally, successfully exercise the all quarter. demonstrated capabilities platforms with first and will Sikorsky near command ability continue third exercise May, multiple across security. The air successfully during has to and vision F-XXs. advance the across all future century all party continue northern and Lockheed synchronize Skunk the Igor Joint domain system world. was the security to from technology of or we for

partnership reliable the these Also, semiconductors. a and capability sea. priority, using more as announce of New Foundries more Schumer manufacturing unmanned join quickly that of the the this administration, strongly Senator enhancements aeronautics and Congress remain In America and century stocker ships. we for XXst will Martin in semiconductor use its leaders and system The and greatly semiconductor, Global a RMS York aircraft the Tom and law supply part crucial to chips year. the of of to supportive of ships support Global valuable demonstrated first to we systems. manned strengthen work Act microelectronics and for signed partners collaboration Lockheed for United access increase artificial Lockheed deterrence that enhance intelligence of our tracking technologies of capabilities This other in improve the relatively exercise, industry us the into manufacturing alongside opportunity team showcase last the produce as resiliency recently Majority Science edge to with and cheap capability tech advanced security made teams will recognition Leader Foundries and much affordably and the platforms Martin to to types across technology Schumer line our our had chain. aircraft and expand within us semiconductor with allies, value of at I This and enables and digital country on and the ensure All survivability the drones and Senate require Caulfield industry, of advance other America access States bipartisan critical northern closely CEO to

call for With you join that, turn over the to questions. and I’ll Jay later

year good results of XXXX. full our for an provide and second I’ll through also consolidated business everyone. quarter walk to area Today, the guidance. update Thanks, morning, you our I’ll performance Jim, and

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

let’s Beginning consolidated second sales at at take with a closer profit. quarter and results X, look operating segment chart

space, benefited year-over-year partly and quarter. aeronautics increased quarter Second with $XXX sales the from This from both by digit million F-XX. X% sales. in impact growth growth last double unrecognized year’s driven

sales benefit still XX%. were year-over-year, that with X% up Excluding Arrow up

lower which offset was to timing. Segment driven growth, operating aligned adjustments the X% up profit net favorable sales by risk profit retirement year-over-year, more than

expected, As are segment margins XX.X%.

X, and per adjusted offset to share, a chart lower by was profit EPS partially an share expense. increased Moving count driven interest basis, on higher earnings on by X.X% up

cash with a free year-over-year in repurchases flow included nearly demonstrating free Moving from exceeded flow share tax in flow expenditures. we shareholder On the and payments cash quarter, to $XXX basis, R&D $XXX returns. X, chart million $XXX capital again, on the capitalization generated commitment higher of free to legislation. our the our million cash of cash of flow Once quarter dividends million

give through For XXXX, we share repurchases. debt weighted billion coupon debt We issuance XXX% debt to a to cash us into returned in of accelerated dividends the ceiling intended $X.X $X to support the XXXX X.X%. raise tranches flow in we almost negotiations. quarter flexibility In across of billion the of repurchases, going had the half but of early coverage three issued first or share and free for the

at of F-XX to XX the mentioned we with $X year-over-year F-XX, over to funding in let's some strong increased chart of due second turn and second results. impact in on billion X, by lot aeronautics to the the saw And the previously on starting Okay, the On higher moving classified segment to programs. favourability sales and volume Arrow C-XXX quarter sustainment with to growth the timing. XX quarter production driven XXXX

that aeronautics XX%. was Excluding up benefit

Operating year profit increased XX% based higher over sales. the prior the on

clarity partners. the stability the As next our for provide now in office option, on end program joint the Jim aircraft the the and quarter. at our mentioned, Lot F-XX the chain backlog of quarter that F-XX term and supply operations exercise we were to offers pleased XXX at production stands longer XX contract

and page were Looking on missile at strike as and higher last tactical volume control year within sales by integrated lower to fire air programs missile X, sales missiles comparable on defense. volume were offset

As programs, were of segment operating several orders second a expected, billion the including by quarter $X across and Javelin. lower in backlog key The book-to-bill in GMLRS. were orders driven adjustments. profit quarter HIMARS, MFC net our LRASM, JASSM PAC-X, the billion a X.X reflecting increased and $X.X broad the down by year-over-year, of profit and record based increases were ratio. margins

nine as warfare multi-year Mission At XX. across quarter sensors. by several program transition driven lower to X% decline to X, Systems volume volume Black in on from Rotary continues integrated multi-year and was radar offset page Hawk and This partially by the declined sales within programs favorable on the systems

an due partially drove adjustments equity earnings. by $XX an updated were Airborne Operating recorded in partially the adjustments, unfavorable profit $XXX sales profit forecasts offset Canadian decreased lower to by that slightly million on net maritime International and items profit to There We higher few significant the volume program, a net a Surveillance down year-over-year. $XX Program. of offset million million adjustment helicopter benefit offsetting

Launch sales XX year-over-year, with chart XX. higher activity coming Operating business area, to from driven points were Alliance Next-Gen Turning up the increased and XX% classified by United profit In a and Interceptor on programs, development additional year-over-year. equity increased Orion. space margins volume up our and from basis by upside continued XX% driven were earnings

XXXX for Now XX. shifting to page the outlook on

share segment also in midpoint $X levels, on profit growth we’ve midpoint while billion, return based million For strong $XX tightening billion. allowing the at to operating At billion the at $XX.X $X.XX a increased full the year, previously performance. our our the ranges us to anticipated, sales earlier than operating up sales to XXXX per year-to-date segment and earnings outlook, and consolidated is are a up profit

work volume with for At sales classified Skunk at million the we’ve Arrow’s and business level, outlook million, $XX area $XXX on Works. by profit based higher increased F-XX, of sustainment on

result be XXXX are to deliveries. aircraft cash we’ve any on while there expect the cost As to we impact in some of our we up minimal collections pressure a opportunities And as previously, mentioned driving expect offset to throughput we shortfalls. make F-XX lower

volume we’re higher the million space, profit partially At as sales from by outlook. the offset sales $XXX earnings raising benefit lower on by earning and $XX a by ULA midpoint million, higher midpoint the development is

of guidance and the share $X.X of maintaining billion cash billion flow committed $X remained back or half billion to above at our the in $X.X we’re Lastly, free with year. repurchases

return for expect of than We with free along our will these the XXX% year. continue generate cash shareholders that flow to to dividends repurchases a more

the changes XXXX largest XX business expectation $X.XX, the with EPS from page by $X.XX profit. the improved at earnings increased midpoint area coming per on portion Looking share we’ve

of lower $X.XX The expect share from a XX or the $X.XX items. benefit benefit to XX% also tax a $X.XX and points. from we count mix lower expect offsetting comes of remaining rate We about basis miscellaneous from

page comments. on summarize XX, Finally close and and our out to

to anticipated, the Our first sales, were return and EPS. our for half results and leading [Ph] earlier growth than year a driving strong increased profit outlook to

us expected gives our beyond. and in growth in confidence backlog acceleration Our XXXX

shareholders In addition, dividends, through robust to we repurchases. committed remain share reward and leading industry

our reliable initiatives delivering With century shareholder and Lois for let’s that, the our focus to And on strategic extend XXst finally, order leadership, Q&A. business call up returns. industry security open transform XLMX in we while and a and to continue consistent

Thank And Melius [Operator from you, Spingarn first Robert ladies from Research. comes Instructions] go and that gentlemen. ahead. question Please

Hi, good morning.

morning. Good

is? So, and a than perhaps of this about Jim Jay, and expansion the drives helps Jay, second And wanted to the earlier these this work margin how how lastly, bit at a programs then into I expected. you from talked could mitigate bit a that sustainable half some that strong that little both volumes get if backlog pressure MFC? you on more year, legacy can see rising XX MFC And of classified at and color how beyond. the on the

better. a will from digit. of demand; we clearly go we next for of few extent feel through the with supply. through And It's maybe the a Sure, and think single to I what digit expect fourth our it that go we’re growth. where if growth baseline need still just performance what look But in park higher here our get call the in at XXXX of XXXX I low asked to at a and about now base although site think to what And it’ll over need to you change, and right because for not outlook anything said to going the outlook growth I take XXXX low this was question supply there, that’s we was be is And quarter months. that’ll January. are, backlog? be to chain question time, determine on the analysis us if was a single that I a back

the higher to would digit. us that lot sure going to low that and can that need are anything, demand single gives make up we the to it would than if itself part return of watch But we of confidence say demand. backlog The so catch a supplies a signal what And that to rate I indicate wait to growth.

As get far would will mitigation, number provide level the we are means as the years. next of mixed these through higher the agree as as from in have few be. to and understand the profile may benefit over that of some in that that will MFC, what this beyond we continued again, and be a will over be margin contribution at upside seen next feel until demand but what months we’ve each exactly there of of we and incremental should we I for go this that what specifically, expect pressure different products type XXXX really margin what and their what timing some do programs

I give Rob, here. And you some can context long-term

for now So ground first, the air munition, primary procurement U.S. quick. government. GMLRS set of you, multiyear from longer HIMARS. the through a get perspective PAC-X the authority which for whole range and HIMARS products, missile, GMLRS of sort a and just joint and I’ll It’s MSC, Javelin, a process the Lockheed which There’s is Martin really run itself, JASSM. the HIMARS, with is ATACMS, LRASM them

all procurement programs So have those of authorities. multiyear

with the currently of about to in been in overall assistance DoD of that GMLRS what already. or pursuit essentially Presidential billion the JASSM the And is targeted PAC-X the far restocking munitions. security supplemental, of for thirds XX drawdown, Ukraine amount the two they’re so regarding for, initiative, purpose has at four train and Ukraine for And are the corpus, support, $XX U.S. billion the meaning the restoring you bills, the and look us multiyear then, if of LRASM contracts the

going Now today. to what capability the a upgraded munitions stockpile, that produce be can was we from to of lot the are those in

of about. So kind that be at that’s just U.S. for that. through go I talked to another with programs of Lockheed that derived about billion motivation at some the X can And those funds Martin we’ve of allocated

those said, upside too. products as for are lot long-term Jay high international of there business. fairly they’re MFC significant a increasing there’s and for So opportunities our margin And demand

growth I for the it’s company. think really foundation a good So for long-term

Thanks very much.

question go Akers Thank from Matt you. is Wells Please Fargo. The next from ahead.

guidance? morning, Can good just able assume was the offset I and the of how to that, Refresh deliveries that question. that the touch XXX is Hey, X. that? How level above commentary year? Yes. sort of of and impact additional year’s Thanks Tech to with then to And guys. for for I it were XXXX cash cash fair you guess kind hold big you on up sort the wanted of on and associated next this follow on benefits

a aircraft. per impact per aircraft Yes around Matt the $X basis, so on million

So was if the into go between you XXX to, expecting were we range XXX. our we when came to year

and there the about a So for million the midpoint XX, XXX. you would to be down go be aircraft XXX. all off XX XXX for way would impact $XXX

you’re between million and impact $XXX this XXX So to year. talking

timing. that does it the As portfolio. a year, point, that tailwinds with it’s of extent that I manage And to your we’re matter the offset mentioned, diligently working and to slip to into elsewhere in really next

So aircraft, yes, those will we slip year payments are in the who remaining it into that those upon to would aircraft XXXX. of acceptance as for recover deliver next

is as XXX because going at of just factory a XXXX, it deliver and to actually the put the more again we producing XXX. aircraft rate than be all in context, in to, can Yes, kind of

actually carryover, run be might the will So are accepted. then performing, will waiting rate the we aircraft more still right what XXXX, to deliver be there’s on-going be because factory some in those while

sure seniors with And to this that I’m having what make everybody the the this want that just knows in we to is senior it. in conversation and make we’re same to applying government. civilian I military roles sure problem minimize that

applying to all for company top it’s and few a priority needed our are this, as others So not first the we all, are of suppliers resources well.

company the as forward all of got matter into flight Department Defense, suppliers, the for this and acceptance, on extra track, move both to or We’re in sufficient and stays we other pilots, make deploying on that. subject we’re operations companies experts in of shifts, And programs schedule. we’ve the running test sure on

program And in all of and sort functions is the test then fashion a narrow of base flight of methodical aircraft purpose continuously funnel. to really finally, the narrowing testing a the the of funnel mission capabilities

And just that through moving and way. so we’re methodical

estimate latest But fourth into early December year. end all really the Could the a the is get move option quarter Yes, of delivery of think XXXX? completed that resources, by Our could. we’re we on and this give it we bit can. track everything that’ll the it schedule commitment, be dimensions little to to for all

you. thank Great,

the Please you. Thank next And go question is from ahead. Baird. Peter Arment from

thinking Yes, for regarding think and in you the we backlog How good step morning, all F-XX. Jim year, we supporting growth? to backlog? the kind a in maybe you’re Jay. about mid-teens the wondering here? up to increase Jay, same expecting was got of now when Or Are pretty of you you’ve are just of are CapEx kind and on context? all how this working CapEx big profile the related color Hey thanks I capital kind expect like growth have just about the level thinking off also that about the Thanks. you to

expect to year. in half on back CapEx, the would definitely increase I Yes, of the it

We’re essentially stay still elevated that’s billion the the And years. going of year. going next for to our we’re forecast holding for few to $X.XX

prepared mentioned remarks. of lot as a capability, capacity his that in So is production in Jim investment and

And so remained to expect of kind we fairly level. return that

working for the that of capital a us a side, On opportunity. is source is

a past, and perspective take is XXXX, what the do to trying performed, we’re what to say XXXX from we period over back really some to it of to down day’s XXXX. that expect We

increasing to would if make that opportunities working we’re volumes, a to cash use a cash. the it while believe in fully to growth. We a make as past we’ve at And source increase so, perform in not and expect And of we’re of capital minimum, levels efficiency perform successful, there’s spite been you at able well. of

so of well our that’s as half next the few particularly year view, the over years. the back And as

Jay. Appreciate that. Thanks

And of is next question from our go from you. Kahyaoglu ahead. the Jefferies. Please Thank Sheila line

Thank and Good morning, Jim Jay. you.

drove given some just your space raise. it guidance maybe So

give improved was little million more outlook, related color drove you driving what out in or XXX you any bit the to revenues that win was higher what space. a of that? on know just You called Can competitive there development of detail us

just the Yes, anticipated of on it’s in than it’s programs. cases many some earlier ramps Sheila

in protected ran the those also we security the year. as We’ve higher half within communications, And levels business, Program. NGINS and includes in the growth So back [Ph] were classified Gen expected. half, expecting space defense we as Next first bit This strategic we run than also to our in at of space. a missile OPIR an international well the had little business of programs,

those in into the with were but all And little come of of so those bit back increase realized up programs really really drove versus together, of the we first the And where in year. half coming the year much back in to we’ve the half. that ramping had a the half, we already planned

you. Thank great. Okay,

welcome. You’re

Partners. is question go Research Safran from Seaport from next The Please ahead. you. Rich Thank

Maria. Jim, Jay, morning. Good

a kind lot the you Paris. stand to an around a been to what of furnished F-XX. bit government In there’s during engine So F-XX. could and know press if I means clarify also, you remarks just for after where And of discuss this the want both thought new program. upgrade since on the general, But engine and engine Lockheed know I’d I like equipment. was for the your as

as You’re first equipments, is This absolutely with U.S. government every what decision selected to of a aircraft is of here. engine that along and block Jim modernization It’s the goes program right, engine. for Rich. what government

engine receive available in And performance aircraft responsibility from and role decision it’s U.S. manufacturers, the the government performance our for simply and their customers. the data option process. data performance data that improvements, that translate we to this and is supply we information Martin’s then Lockheed whether for future. to answer a their And anticipated So we to to questions then making modernization then are replacement or

that involved not we’re in process. decision So making

a not And have Martin on We position we’re that’s doing And formal therefore, selection or now. this engine modernization. does that company Lockheed implement what government decision. U.S.

very official not of anything And is that that clearly and role is an company responsibility. outside So our position.

it. Got Thanks.

from is Noah go ahead. question Thank Sachs. Poponak you. from Please next The Goldman

Hi, good morning, everyone.

Morning.

second amount, have in guidance year-over-year. this the We’ve the revenue comps. the fastest grew the authorization. a organically and the talked would decent In in outlays tougher a about organically. Jay. know at back while where then to be down have the finally have half lagged outlays the quarter, revenue grew I dynamic you half, your But back updated the rate in

curious assuming resolved? else create whatever I’m So that closing, I or continues out that gap it authorization you guess upside that to that was guidance And to talk the supply keep play outlay about close? are impacting Or way? is to would to to is if going building were hear you chain

the outlays you to is the us, half. a the still it’s look function always case dollars And will sales back When a have is higher. the increase versus to of driving first of sequentially a no, think half, here. than And a first be it higher we half in lot that’s continue our in that going still overall is the aeronautics half We at about just is billion back that.

were sales over it’s are where a more expect I year to the continue to than last time. basis an outlays increase that period function of on so would loaded And absolute our compares, level they this year. The

is in you significant million or year. quarter having have into the will the it had we as And third up in later, of the won’t yes, that to that But $XXX a are year, XXXX. step be it last if quarter slipped part recall was last a sales. and year second we we So as sorry,

able first contract that late were we anticipating the a on in award sales to we’re quarter. immediately had that quarter. convert expecting also in F-XX weren’t quarter. the We fourth program in to pre We inventory the the And

the when so you here those for year much XXXX level memorial you had you we of when this. normalize million things last compare be those it last And was quarter, load So in on versus about drives is combine difficult those the quarter. fourth $XXX basis XXXX, growth on a reasons, going of in itself that partly in year-over-year to these X% because for year to in The fourth just more a

of expected. from we just Yes, a the deliver of the declined, we’re at in position we that still but putting it’s So It’s our earlier higher, just won’t than growth organically year-over-year not the ramp just to see rate the year had the again, at program a perspective, up we timing. half also still see year XXXX. a function a but in will that to us we relative back

on us Got beyond XXXX think the recovery. statement, it. for I you the Jay give and And pension that? been updated contribution numbers Could since a cash cash updated bit flow you’ve it’s

Sure.

$XXX million $X we’re a in billion. that required right for cash anywhere would have contributions, For we’re now cash to between we cash contribution XXXX, anticipating

through noted I call, More is our three and offset that really As in objective things. to income, income base contribution. earlier really the cash net net

the that dissipation We’re terms a performance capital also R&D headwinds higher it of of capitalization working driving be seen. will to going a tailwind see level. to in we’ve And productivity

with our basis. we that And result on over is share single deliver offset a our So flow flow cash repurchase low can per free to absolute growth. mid-single growth goal continue period should to combined free in share an that digit this a time program, of digit cash

of next for period stand objective, on contributions, really and over that’s planning longer few really But well. a we’re So where years, the as how time pension we it. over now that’s our right not

Research. Thank Myles you. Walton is ahead. question The from go Please from next Wolfe

Thanks. production per DoD center Back to above on in was the limiter XXX F-XX the April, higher year. production the fuselage said the

above level me, Rheinmetall decade So the talk the capacity? XXX with to towards the signed up Rheinmetall, now Can about as XXXX. starting for maybe fuselage is steps end the you XX% excuse up it’s upside in of

Well, the there of are ourselves funded between essentially other and U.S. level our the on build able element the government. government But be with elements that all have to rate a agreed far miles that’s above expand being would the lot that past XXX XXX. suppliers, entire of to important we’ve in chain so to one the supply

go might fuselage numbers beyond to say. government industry countries continuously, will there for a to if or aircraft, existing So to the more either more more case Rheinmetall in seems be [Ph] and constructive center to the The the that, which business the in it of the XXX. for countries, authorizes continues expansion definitely export more aircraft demand and be re-joining let’s to the be U.S.

this you issue, slowed clarification, lower TRX a the despite on the just correct? haven’t production F-XX system deliveries, the on And

No, we haven’t.

completion But that of waiting confirmation will the chain, we’re, be XXX. So the aircraft not the through will our to are load the supply their as XXXs, delays, not There’ll what for delays ramp time the has for. aircraft, deliveries delivery TRX system, just on not software the the are There even that’s flying of on up numerous and especially if there caught tracking be together at lag. testing that the XXX, only completed be be mean software flight production lag they on fully for That’s a load. the that aircraft they’ll based the be points. The if really going just whole aircraft parts, ramp long the ultimately for. software on of to the lead between, same won’t passed on production waiting have time. among in waiting of the be test And all but done air integration be they’ll a

you. Thank

you. Thank

Our Please next Herbert Ken RBC Markets. line question is of ahead. Capital from go from the

the these for margin of from morning, Yes, any you the long-term understand we and is for positive hog. margin and the us think the risk there Jay. the on and about any how to hi, this, then allied Is timing obviously related munitions impact you I this sort part place as much in there two on Ukraine of of place Jim question, in war And is based A first potential longer put of or how the on and agreement, maybe could backlog help can part back funding to good of growth partners directly restocking. going agreements? well, should if a around term either the lot ultimately, have

me agreements there multiyear But, requirements. which, Let contracting Jim of yet included any under here, are as backlog XX which was contracting, XX%, Ken in some There the only mentioned, GMLRS, also the quarter, contracting requirements. go what we second were XX yet. but to was the saw also something with towards multiyear backlog, the much not particularly we’re working

And sales. so, is the backlog to it’s pretty confidence, we what to into convert put going high

we’re it. continue do so to And

a mentioned, beyond requirements that. As the multiyear dry to with Jim dialogue a customer having

agreements As many essentially, customer. agreements, requirements, that period the with as with marginal will these we of of far back terms with so our our long-term time to in into over enter we’ll supply of chain, cases go back

as multi for that year. So agreements enter our will suppliers into will cover multi with years, contracts we those into we get same customer, also our with

drop probably benefits is to that to in customer any from get pricing. favorable that through we going and our So terms

So upside are be where I wouldn’t any from expect to there we margin type of today.

those But So from I pretty are would expect solid. again, consistent margins those.

Jay. thanks, Great,

you. Thank

you. Thank

Our next ahead. of question go from the Jason line Citigroup. Please Gursky from is

an margins, just kind maybe talk and margins how about purchasing for Good at expectation a maybe quarter Jay up then comments your also, those could if comments morning, little purchasing you digits, other move opportunity chain, outlook made future. low you of during on, of your the we bit segments kind beyond offer through for better MFC. that about supply about give on going you’ve into segments. other to maybe baseline your you us XXXX consolidating I everybody. little and talked you and Jay, getting the single and in Jim, power And the as and mean some and point. some have XLMX around this particularly the a walk initiative pricing, and bit informing that's the out assumptions some

and so rates start with Okay, beyond. just XX and growth the

make be growth from go sure, that. meant clear, MFC I’ll would And the expect them said entire I Just should single digit, I was we And sales. to for our be low company, to than I total better when significantly consolidated segment. highest there.

make the demand, that few significant, very engineering really, execution which Many over we’ve obtain, margins, be us, from we’ve to will our It’s management the an The tools, incremental those lifecycle tools, been, to product next On it’s but our will system us through our more tools, others pass MFC given this it’s that intended and benefits XLMX, years, we pricing for of driver rates going on demand or a a ERP those HR remainders, customer. tools, will customer this and system is competitive forward the the seen. it’s see it’s our upgrade. some make to in more initiative company. pricing tools, growth we’re manufacturing our our is relationship than

business and it. And benefit won’t so the us it margin necessarily more to stay front more our industry leadership. from maintain we will in our see competitive some But more of make and capture

it. way financial that’s really And the XLMX and we’re more of of view so approaching a a

mix to work going fair development and on will So forward largely that outcomes between then, margin say depend fixed.

will that’s, factor Yes, margins. that’s definitely in, in accurate. say The mix a that’s I would future be

Okay, thanks.

you. Thank

you. Thank

Strauss next Barclays. Our from ahead. from question Please is David go

Thanks, good morning.

Good morning, David.

to your or on I potential been just Thanks. around being one, gotten where on out you’ve XXX, been authorities. Lockheed get if based Aerojet acquisition deal. of LHX has any with tax some to satisfy second able comments think terms the we whether from L-Xs Once concerns might able your there to you they on recently an see section Aerojet changed update position reviewing of anything’s around are that in feedback have there, And the then of

say that an our been by acknowledged related some over there. six has the guidance position, Sure. XXX end the sections the is I’d hopeful provide in we’re need position change they guidance probably our I’ll past, see issue question. take there’s year them to IRS to, to the the of In no that from months, this we’ll

And the and in that we today. of may out I’ve that confident position laid have And why in past we’ve what our await any eagerly of so, we’ve type guidance have still taken. we that feel taken the position they

the legislation to that XXXX. some be XXXX, of been implementation has There it section would could defer to retroactive XXX proposed

least be a we’ve optimistic, would So of deferral we’re start. But a at should be course, that repealed. believe we it good

supportive we’ll Obviously, And legislation. it we’re Congress. see And so monitor how of that. we'll through that works

two. industry. Rocketdyne, solid comes have to aerospace And we motors and interests entire it only critical propulsion, especially to are when the access importance Aerojet And two those reliable to of rocket is the critical and then defense

of OEMs supplier equally. that merchant need it’s treats benefit into we -- a preserve, of them end current that of to structure need prime that And Rocketdyne’s feel to is contractors means propulsion the so And for And sided Aerojet ownership industry. another the it to goes two the that’s the of if company. what we AJRD I’ll preserve all we the even hands call products, the

improving, AJRD of get has performance better been the nonetheless. to but significantly it Secondly, needs

etcetera. its And becomes it own or more to applied on it’s it’s be quality, company, so a resources that on really capable that so time, supplier whether operations, deliveries, for of part AJRD’s important another

two are of the performance interests, those maintaining that the our and So company. also status, higher operations of merchant supplier having

us LXHarris are one that would keep have supplier. merchant we And a So the as are we for. to time, at thing this looking received assure going AJRD commitments they that that’s from any not really

Right, thank That’s you. very helpful.

You’re welcome.

Thank you.

of next Securities. from Please Our go ahead. Ron America Bank from question Epstein is

here. hey, a broader good question Maybe Yes, morning big picture guys.

to And XXXX, we programs, billion as it the what look fiscal the trajectory, even, NGAD, And so X F/A-XX. and in from be spending budget, or so looks we there's As maybe what of XXXX fiscal XXXX. everything going to on XXXX? fiscal out was maybe aircraft classified like

kind in can of you just the of chatter and to think you say, platform. a feel what but I it, guide what means with can as about How Now think this hypersonic for replacing about would outsiders you that limited it? about Lockheed what it? how kind for know U-X us Martin? give about there’s think been model you us you’re And

and there bright It’s our our I’d is company. start for with a that, Ron got classified already. experiencing in we’re spot Well, significant growth the portfolio

rate. we’ve aggregate programs growth classified of recently, think sort of we a I our X% been all when together

kinds I’d of it segments significant to our in of challenges Works, really some there are we have what remarks, operations, endeavoring prepared that the of and because science Skunk we space are kind So talent those capability where even in spaces. place this advanced work areas are MSC where facing. beyond and where areas is our a of into to company move are address customers of said basically they to RMS known

rate larger have if take advantage what the of of happens. spending we government growth to on classified capability so a And that’s the program part

which to you that to good in There’s are we’re right. missions can the strengths one And of it mission, of it shape that’s Skunk a can that. example. So done There of comes to aircraft, and Works be differentiate system. need surveillance the unmanned with reconnaissance do for lot right, though when

said systems F-XX. real a generation ISR the that we in of that called. got you It’s is have Then next unmanned NGAD superiority aircraft, that there surveillance F-XX, air dominance you’ve Air for recently type can the example, strength Force So is right? classified. So about is the are mission think air competition. aircraft

was Now beginning aircraft for that dominance old that train it that are very aircraft. for in air

the which We’ve is pure the base, basically take-off or runway, a which aircraft. the you’ve again, tail long landing then landing got carrier a is it’s got kind and hook Marines, F-XX. or the carrier, there’s is Navy, land variants, solution it’s F-XX of of short strike Force, we airplanes, type model, of [Indiscernible] for And mission. which C-model, then landing B the base, so is solution, strike where in right, three solution. runway And And land Those all right, all-purpose aircraft, the so big Air kind take-off have that's advantage so committed for volume, is right. F-XX, volume the the a which

and capacity the F-XX large the through So pursued the for and can for will the mission, part strike be future. near

about to So ways aircraft. those are the think

and largely largely forward. be which to bomber and So the carried is out classified be then B-XX superiority part, to the for going by there’s are the going the most ISR mission, programs in air Going

hopefully, a question to bit there. your that’s So helpful

that And high our digit with seen, growth the around recall, business the $X over particularly anywhere growth our probably given pillars will all second what programs record, one of classified of billion. we us or for our Overall, you to if portfolio, XXXX. be through it being about talked highest through grow projection highest But will running. of the just is the single our four XXXX. way the between we’ve And mid MFC. entire be And

right. it? Thank you. Got All

You’re welcome.

Please from Alembic Pete ahead. next the of Advisors. from go line Global And comes Skibitski question the

easier, hiring Thanks. Yes, just just Have wage and people? cost, last labor improvement good quarter. And morning. rates? also become in then hiring Can you can of you you from availability incrementally there? seen just terms Has talk about

past we’ve significantly. has actually, availability months, over so six Yes, our the labor improved

growth, We is have sales this growth partly has the in of time. closed a And outlook, incremental we’ve because that own sales skill the lot labor. of our that here internal just change critical gaps key of our that enabled our over seen part period

We’ve months rates, we position seen as so some as were in attrition a better better hiring And ago. than well we’re rates lower as well. six much even

that the particularly will that stick confident the and of we’re rest fairly for supply also bodes so And chain. well industry, that

encouraged we’re by that. So

Okay, that’s great. color. Appreciate the

you. Thank

Doug Please question Bernstein. next from from Our Harned go is ahead.

term to the go If days things Good the and like a fire morning. building you Ukraine like were of it everything Ukraine early missiles Javelin be would back there out for in for back short to was Thank Russia, stingers, if kind a you. looks to need, for I there control course, of potentially of conflict, minute, weapons. replenishment because we capacity want some of think

now awards into than in are some other big related year European to later Ukraine, more or gotten we to directly be a And appear quarter, this this. so needs. last that And either very you’ve

We’re seeing go spending NATO up.

resolution things increasing the missiles opportunity play involvement, a your think planning? you depending saw, that if and on in talk Ukraine, for the how and may how we in about if come about I do and to you from how view revenue out or fire NATO had we control Can backlog? conflict you and, had,

and would and national quantification unveiled Ukraine defense enterprise for of has our around to So that is some Jay tragedy right. it turn the it for weaknesses qualitatively I broadly, over say maybe some more issues

Doug hope will very MFC. But this for is And that’s we affect for And I many remain lessons war not is the duration Ukraine important. that convinced so will, of the years. which conflict I’m most from think short, prospects will our long-term what the

from mate, that sustain expand to the its the this foremost, the they the power point invoke major risks and its that unfortunately, the the decision And take at continent is war world was Russia’s to great power risky, European conflict, on in first are be. lessons not whatever gone a history. or power, motivation in may to other case, pretty regime and future demonstrates and land may

So Poland countries the short NATO term, the long and ministers taking seriously, this you to but the defense for then, Lithuania, not and term. for of talk like they are when extremely

are need themselves that, is defense going supportable the for stockpiles, right Ukraine what’s their And replenishment countries necessarily so to, when be the they foreseeable shipped much the for of It’s to the have United stockpiles Sadly, higher of it comes there’s that States, But among the and deterrence of of And now. conflicts their war been period they from to their all adversary And would perceive budgets be. is than the expanding on models is beyond usage what’s allies are its the for own and the situation to imply. need risks that they on to the first where not potential future. gaming a Ukraine, munitions long planning defend future to therefore, that time will their used to a rates been our what’s in most elevated lesson, U.S. from of and others some ground Ukraine. demonstrate of of hopefully, need expenditure the for going and a industry. existing of unfortunately, rates if because in this in munitions

others. for So and allies, term, including U.S. essentially, strategy sea we the the Philippines is think our for Japan longer change national defense this Western and a and in

demand the the we for and ends stay kinds future quickly. So to time, Ukraine in long very we of going is these think. hope conflict But a elevated the for lessons products

we the longer are a large orders extend nature of these have over time appears period with over work you’ve that And consistent quantities gotten than of that might recent thought.

Right.

This is Maria.

hour think of to the come I the we’ve here. top

for So I’ll thoughts. turn some Jim it back to final

talked things. It defense. around after I that think like of huge to understands XG, originally couple is of partnerships make really to to And I making exercises, by do conflict revenue about we’re it. accelerating as around years major the adopt international customer prepared wanted repair to everybody that. up launching and technologies great I digital remarks, help the what start Awards Program the increasing we’re getting cloud, strategy. XXst to and on we’re got small proving tech companies now We’ve AI, and include was security, to our and starting three and set and of the concept adoption actual think of deterrence progress a that, century large showing us a distributed sure with we’re And remarks, a I great some Just that.

But expand that this last concept we’re experiences the two into based in on arenas three going years. we’ve two to had or

strengthen first and of to just one build the talked you about. on The based defense production is the some chain supply things

dimension potentially, to. going We’re can hear us. see, sustainment new production if and And defense future. you this operations to U.K., talk for at is scale Lockheed part to production have make resilient a is system quickly a to Poland, us then one the and least Australia, Martin’s in more other And have we that investments of you international have in about the Germany

sustainment chain, internationally the around to have conflict customers our use operations where continue going them and to we’re we we have to resilient can sure to future make expand So world. supply deter

the to those things headed. are some you for we’re think of is really all understand where So I important

every classified provide it’s teammates, and financial operational contributions many work job for people our their the and the pandemic national up job to experiencing or performance all show this a Martin do do really continue was showed I they been concluding before we’ve would the and our call, important look, day like their the my during the thank that deterrence. on increasing up engineering in result day security of national floor or the and line for dedication, to to strong facility factory security. to strengthening hard But every flight to to whether quarter customer Lockheed And

in next joining want today. you So October. that on Lois, We speaking call the thank them for us call you also to to call. with thank forward I on our our and all look concludes

you ladies does for conference service. using AT&T Thank and and our conclude that you teleconference Thank for your today. and participation gentlemen, for

disconnect. may You now