Lockheed Martin (LMT) 17 Oct 232023 Q3 Earnings call transcript

Good day, and welcome, everyone, to the Lockheed Martin Third Quarter 2023 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, Lois, and good morning. everyone third welcome conference XXXX to call. like to quarter our earnings I'd

description on release Jim our These Investor regarding address call of President me are call at in results the the factors Joining call view our today historical link the access not are Statements in Executive may that on may fact that and those filings to also to We statements. that are non-GAAP statements. cause call. Officer. forward-looking those from projected today posted a the in forward-looking made charts the statements harbor comments. and of to website supplement materially Officer; and Taiclet, Jay and used some pursuant actual are Financial SEC the Malave, charts information of on Chief measures the federal Relations differ forward-looking today's provisions see our from click and to today's differ press Please include be plan may considered charts. materially safe Please website follow for made the today's that Chief securities our to Chairman, www.lockheedmartin.com our laws. Actual and our results in we

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

earnings Thanks, XXXX call. everyone. on you Thank good our Maria, morning, and third all for quarter us joining

designed I'll taking pursue of quarter then third it Today, before deterrents of Century over I of Jay U.S. Department peace. efforts we call, your the our highlight now to the XXst support additional questions. and turn provide to as security on today in that United supporting dedicated States is detail will line are our us achieve our and to world restore Integrated the first aggression, fully government's last of yet vision to aware conflict. remains and to All Defense another Strategy well results seeing deter our company Security, Everyone terrible policy the since

Starting remains XXX% X cash of slides. Sales $X.XX flow We $XXX the free and year-over-year strong flow backlog historically of increased shareholders free at dividends levels year to and of a through on approximately repurchases share was at X% billion. billion $X.X and prior EPS the returned Page cash high exceeded quarter. to during $XX.X million.

announced our growth same Earlier a XXst returning the and X% increase consecutive reconfirming October, $X total for in of increases repurchase dividend in shareholders. reflects commitment we share also Board to dividend a which our to is authorization continued $XX capital approved bringing our our the billion authorization, $X.XX Martin. year billion, Lockheed in At to time, increase our

free also full outlook our for flow. are EPS profit, cash reaffirming XXXX sales, We financial year and

will XXXX the macroeconomic and we during in earnings our U.S. January. call global status outlook Given geopolitical tensions environment, Defense our current for full the our financial expectations the budget, of XXXX provide XXXX year

On landscape specific the of in elevated. the is the still U.S. is Congress, U.S. increasingly future budget, the and administration Defense budget between global trajectory the process threat though

portfolio and domestic our Martin returns conflict and and backlog States the business and elevating involving of Lockheed the positioning and United importance to international reflects allies of great relevance Our to customers. robust serve solid the our the power its

and of there the government whole CR a these Ukraine, potentially partial In following At bills support be the or in government, XX. partial process Congress current related appropriations one to will 'XX for be any to be occur. From shutdown. option November or through point, or another that also continues a could scenarios, supplemental there could standpoint and will is enacted, enact the Israel or resolution CR Taiwan. place FY continuing full of requests

support potential are customers Defense will minimize for we with As meantime, its FY security our strategy to technologies be consistent strategy operations. to the 'XX building driving suppliers any continue funding the and disruptions will resilience of our enhance international optimistic there we through the efficiency capacity, to business expanding continues to bills, press executing National and and appropriations operations, to into Century deterrents work due work priorities. will XXst the production we on our our Congress and for advanced that In with process. digital integrated and And

Turning XX XX the announcement aircraft this September, Refresh to the bringing X to TRX in delivered expect with F-XX our year, in third F-XX aircraft to the year-to-date program. in configuration. we jets. of a to all We continue quarter, the Technology or XX Consistent deliver total total

We are producing that expect billion F-XXs to testing. to development pace while and software year, TR-X working per ] at simultaneously at $XXX a rate finalize of [ continue

And we that flight system next RADAR, and the began test weapons as major of upgrades recently capability. software evaluations systems release next-gen encompasses improved aperture distributed such

the June of As capabilities previously continue The strong deliver between of both and announced, and domestically we generate first technological continue expect aircraft internationally. superior TR-X interest April to the to F-XX XXXX. configured to

foreign Fighters. of soil. the Also In Korea for their Czech record September, September, F-XX arrived Denmark's F-XX XX aircraft in locally home $X F-XX to II Denmark's U.S. calls the Strike Lightning military for Joint chose to Republic of first part program the XX based Department become on X sale F-XXA aircraft. State to approved and a up global program, billion possible South

Earlier third an to in announced its the quarter, fleet aircraft. which increased additional that F-XX XX squadron will and XX a Israel add buy F-XXs, we'll

will and transformational scope will of Martin the revolutionize completely JADO X. Lockheed of world, free the Defense, Pathfinder the Domain program defense in August, in Australian Department way program Additionally, as the Australian for All Operations, partner or operates. broadest Joint selected by the strategic Phase their AIRXXXX deliver force was This their

and that awareness defense between situational nations. across significantly This and By advanced for cyber against military that connecting and future set Australia greater land, will increasingly Australian and AIRXXXX the and interoperability proven systems allied sea threats provide we operations and platforms air, enables domains, operate air will expect space, blueprint technology worldwide. greater missile

This Martin domains, which just Century is battle first reliable provide and cornerstone, will lead that Lockheed command recent the and services the Security XXst trusted will win management that and systems success integrate across for X and forces. core our multiple this architecture business and program. multi-domain phase of the military control demonstrates integration allied

JADO services Navy as and will systems potential Martin enables This deterrent portfolio Late and Guard. million last more contract won across and Defense together and software and the systems year, late not only in Guam over decision-making construct billion capabilities it $XXX And but Lockheed integration much also a system also September, of to integrated $X a awarded X-year, force were the U.S. for award. software we combat engineering also of surface strategy. the link and better faster Coast global across the the effective serves a

to Martin XLM to Beyond Aeronautics. updates XXst missile continue between Lab in Prairie, sniper the that in targeting Century inflate. Security XG.MIL data technologies lines. these and from MFC initiative our real-time teams a advance Lockheed interoperability at a We Simulation that up that recently transferred to Texas simulated Grand pod Orlando, develop Missile hybrid The to was provide Tactical is product to Florida set station invented includes the base we awards, engineers

Skunk live commanded with environment across from that an demonstrate University significantly partnered Also, multiple Performance event cross capability. will towards operator joint of fire platforms sources upcoming a efforts an demonstrations use architecture. open Works of Iowa's Laboratory advanced in AI data This to the domain operating jamming

performance strike to simulated jamming against enemy coordination and In air This X support reliable to and defenses. operate successfully used with a with how and by systems human aircraft. we high this, in provide be artificial controlled demonstration behavior showed intelligence crude agents on air close AI

a PAC-X missile the of PAC-X that SPY-X sensor radio for a will design and link for RMS paves radio Weapon the team MFC the XLM for System. across the in MSE. This conducted the of the MSE radar, a with enable We prototype performed way also test Aegis multifrequency data the key successful test communications by

strong, time the onto and of its signed for another the Poland, will to in PAC-X equipment that up Navy warships partnership integrate future. turn, related state-of-the-art open MSEs as missile the for PAC-X Lockheed XXX International In demonstrated with and in in by letter acceptance have quarter. which PAC-X also for and the U.S. remains ability interest the a enable the offer our first Martin to opportunity deepening

helicopters In business, August, meaningfully In helicopter to RMS this grow we won the expected date CH-XXK contract for multi-mission procurement it's to our CH-XXK largest billion and coming Sikorsky the deliver is aircraft. additional also XX years. $X.X build and to a over

major Martin is Another one poised also space significant ramp. is for Lockheed this long-standing growth program,

Navy's the a late billion DX the life extension. Ballistic Program for September, In won $X.X Fleet Trident II Missile contract

II the deterrents. maintaining Navy the U.S. as will provide For Martin for a LE DX cost decades, nearly mission strategic DX critical than less missile. new the significantly XXXXs, proven Trident its government sea-based the to Lockheed in be of supported to X service of system through for a performance partner designing missile the The

Lockheed Missile preliminary with That Space our XX. the in in executed Martin's happened or interceptor, design September business, review next-generation Also program, digital NGI on its customer. Defense partnership Agency

continue NGI demanding into the the confirming requirements maturity to mission. to design continues this crucial and that readiness our assessed solution MDA and program's the the review, for detailed this During meet phase,

X-year ever teach from returning Desert return under approximately, traveling mission the that material overall name the on carbon-rich After in behind origins capsule, first the Apophis I space. plus is hope the us on billion planet sample scientists to and Finally, the the release investigate a course Utah OSIRIS-REx a will sample mechanics to asteroid an X capsule new more XX, down miles Bennu set organics was holds After of spacecraft from capsule touched mission The the the on in life OSIRIS-APEX. asteroid of a it earth, about asteroid. led September believe, formation. NASA's

and and that with the Jay? interesting to join questions. later it turn you I'll for call over Jay So exciting news,

Today, Thanks, our offer also year will Jim, XXXX. and I good everyone. comments update morning, walk quarter an XXXX our you XXXX third to results. I'll few on and guidance, provide full a financial through

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

on with sales segment consolidated and Chart X, Starting operating profit.

in adjustments increased delivering margins profit down resulting was due X% quarter X% operating XX.X%. segment profit lower of with growth. net equity favorable areas X business the year-over-year Segment lower to Third earnings, X sales year-over-year and of

count, per EPS primarily comparable expense net and share earnings including profit. basis, lower lower offset share to was to below-the-line On was and adjusted profit $X.XX year-over-year, an fewer on the favorable year-over-year, down items, X. rate by GAAP losses. segment Chart with Moving lower due tax higher mark-to-market lower interest EPS

X. on to Chart Moving flow cash

better to Our $X.X our Once our through end commitment income, due or focus we part XXX% of year. government collections flow returning billion billion year-to-date of working of to the quarter free cash demonstrated or basis, shareholders the almost at returned by cash in was fiscal quarter. the in dividends and at repurchases of XX% over flow cash On by capital, flow. free XXX% on $X.X net strong helped again, we've free a our this share primarily

mentioned, our total shareholder our the As authorization. billion tools to Jim an a additional X% key and These quarterly return dividend share strategy. repurchase Board of remain $X a approved in increase part

Okay.

Moving with to on segment and results Chart Aeronautics X. starting

saw year. this decreased solid and an the Operating and to Skunk third quarter throughput in mentioned X% the driven down XXXX, due adjustments. sales on volume linear XX-XX profit up Lot the offset lower due Both was at year-over-year prior to previously sustainment year growth from Third quarter. development F-XX profit lower quarter at volume in volume by lower production of Works. Aero more decreased sales F-XX, net by catch higher XX% partially and the overall the

a Slovak the On continues in of XXX a latest Block program, delivered by Block Security program countries coming for to the to the to counting. Today's as With European the at for version growth will XX-XX Greenville, quarter, interest aircraft July contributor We over will Republic capable of Carolina. a country South the and It allies. unveiled play version, fighting. September, be role F-XX international missions F-XX and the the The facility aircraft third XX in aircraft the the backlog in and most flown be our this crucial Slovak Republic Block newest the XXst strong. will key was Bahrain be years. receive of Century X second in first international remains XX first to

to due X. to offset profit Sales were Segment on driven continue GMLRS, Shifting to missiles Missiles year-over-year missile years foundation operating and backlog posture HIMARS, X% and a environment. coming backlog, munitions volumes Page with and Fire adjustments. threat on within defense. the strong year-over-year built Control by MSC today's the nations has at allied sales provides amidst and profit LRASM. see to This munitions also increased our within X% by Strike growth volume for integrated programs Margins Tactical improve of security Missiles, PAC-X, seeking demand increased Javelin our complex XX.X%. higher lower the and across including strong JASSM product air and comparable several higher partially a over for net lines, we

lower profit Turning Operating to on sales volume higher of of quarter, volume driven net increased Systems integrated and were was X% warfare Sales and due Rotary business. and higher up programs CXISR our lines X. the partially within by sensors Mission Page adjustments. to handful systems across X% and by a profit offset in

primarily is rate quarter, of transformative $X.X Lot the and first with bolsters and part as for significant production lots efficiencies record. production its due the the This Marine X Marine program in Corps Corps U.S. XXX the provides award, backlog RMS U.S. and partners additional pictured CH-XXK to contract of the creates full which aircraft capabilities. billion X, increased Sikorsky

earnings continue lower decreased volume space our strong Operating net NGI, Alliance. On XX%, was higher with benefit by and sales portfolio profit programs. across the lower Chart and by more growth Ballistic XX, as driven adjustments increasing Launch GPS X% to United offset sales Orion we from Fleet see volume than higher profit equity Missile, from year-over-year on

to slightly will deterrents the we by advanced communication space and quarter the architecture this Layer Layer resilient at their beta more a data Transport XX tracking. beyond is of award, Tranche of helped $XXX with transport X the satellites. and of deliver billion grew detection low-earth award total Space will constellations. Agency end million $XX third over the orbit for XX strengthen and line proliferated satellites architectures sight for build part of data missile backlog support space the Space targeting, Development of and in to With Transport

Okay.

our Now shifting XXXX to expectations Page on XX.

year, prior difficult year's cash the share linear the driven more and more segment which compares we're quarter. use to in outlook We've our of per sets enables earnings operating for full successfully capacity, flow. than for efficient For and profit, fourth holding delivered years, sales, free last a but results up XXXX

increasing the nearly $X with of of share billion, we're nearly are In increased we conjunction to with on our future. to We're an per repurchase recent in deliver share that the mid-single-digit in forecast of These cap. flow and announcement current are between share XXXX, to shutdown level continue year. is growth and track company XXXX to XX% cash free to provided set market XXXX, for our not dividends, we're repurchase there for XXXX positioning to growth repurchase authorization, the of And free our flow also return scenario. XXX% cash our extended along shareholders repurchases expected

Okay. comments XXXX. on few A

a as our I'll directional see low to markers still we don't environmental we a strong share, anticipate convert outlook have We few any we barring provide them formal as today, backlog sales single-digit setbacks. growth position. While

I backlog rate, have a but value compress. mentioned, chain As that lead remains the supports times extended growth previously constrained yet the by to higher

but share. targets to in process growth have whether the our impact timing free our year-over-year, deliver program the underlying that cash we're on schedules business of by anticipate caused flow the program. of variability MFC On expect free the from budget and to the segment milestones, are to per flat flow, set be And but will margins, classified continuing internal relatively timing determine we an following impacts cash it mid-single-digit

Okay.

first through have it that Century favorable up. Results with wrap Security solid XXst long-term a Martin's X Lockheed demand Let's environment quarters been the is to capabilities.

demonstrating accelerating share capital with collaborating Security shareholder Our we're and capacity focus technologies, through repurchases, executing year to And consistent our planned Century finally, is and our and the on of solutions. improved to sales our Century closely working resilience digital improve more further and in insertion cash We're more improving allies our flow. to XXst XXst outlook commitment helping increasing the drive defense and while security and maintaining partners strategy linearity international adoption enterprise, returns. full

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

Harned first line come [Operator Doug Bernstein. question Instructions] Our will of from the from

wanted I -- to little see could understand if I situation bit just the more. a F-XX

on need us year. to Now expected have before the revenue revenues, when how to QX think think in continue delivery is should be produce at, TR-X earnings next for of some it's look timing. And should so But point recognition recognizing cash as delivery, F-XX, that what and of difficult production the I'm you're F-XX, deliveries trying about now what's you will date, date which impact those confidence solid. June percent are your total you a in revenues we understand around, timing software continue on flow that at the completion, But to say, here? to upgrades move should I

and on expect the I the Doug, really with much variability So sales timing sales, margin, profits booking the associated that. shouldn't the with

As our impacted. obviously we've are dependent really what test of mentioned, upon retirements the we that doesn't today could you complete and program. seeing is are see completion successful -- that risk What get

Lot And X XX-XX to continue expect Lot limit we so will program. we on our are XX-XX. Lot I've said on to the than did could -- XX-XX profit take to profitability on and that But ability adjustments perform a performing past, in stronger as

one. take ability expect rate profitability some adjustments, the still locked this see drive prior higher might short-term we so we will confidence And on have our on and profit limitations in to contract

from from is von line Cowen. the TD Rumohr question next the And Cai of

Yes.

a one and I 'XX. of you the haven't been has a maybe kind where that you classified margins, think of at you on made the But I gravity comment MFC, think program Jay, you issues some provided recently, have status terms guide missile gravity LRIP So impacts for mentioned about And -- of items of be the give some options in that color on watchful we should you exert could up. coming Could how any impact might next that margins? that other us of and year?

Sure, Cai. Thanks.

something years, year, we've fact, headwind I about of headwind. of a analysis this about. It's recognition the losses. in some dependent it And timing an number that been it's really yes, seeing question upcoming talked year. upon that's of the are It's we've really of for mean, including these we and next the So the talked --

And that standpoint on a met there are on becomes it an the program. certain things be being performance assessment then to exercised. need And from an probability option of the

year's It could And timing. so in or downward find in lots we situation that be would next we're there's recording that a as as multiple variability quarter. just on frankly, early is next this What as, quarter, margins. put XXXX, could in into pressure some which ourselves

we'll where XX a a range next the feel year, where today So from margin are we between in XX this from better of have that and basis be could of and perspective. points or we anywhere year headwind for it end to

a at year. lower provides year, look, as we bit we little that color others, that Is had profit of this adjustments look hopefully, So this that impact any on you far if the as -- program. of

prepared I include in underlying recurring which we're low XXXX. profit think, We're would that We mentioned expect as XXs in much margins to there means expecting for be flattish, the XXXX evaluating as again, remarks, adjustments well XXXX. business pretty in my what I But general. to rate as be in in the

Yes. And it's Jim. Cai,

on classified Just the program. to add

can for continue important be should tell be a and massively pilot program the given decades, as the assuming Air really all, it which many many, It and think important I frame. time for you an experience, years capability on on to of over is positive First is capability NPV even Force successful, track this we're we longer that my country. that will

on worth phases our there. will of updated all end at the So company. the working the the as be country the early and performance just did the it you in the of and contract, path Jay schedule to keep it get through but But the we way we're will day, for the

question Morgan And Liwag our Kristine next the is line of from from Stanley.

thoughts What F-XX maybe Israel, seen We've So current express F-XX partners countries existing have add question. interest lot in an a new orders. to indicated are your to like plans And and the to the on international of customers investments? there level you the of their potentially meet And expanding increase deliveries? bring from capacity, all capacity demand? to forward should is what demand

joint maybe I'll investment speak joint of $XXX there. directly year given F-XX the the the So indirectly discussion There represents of many will all Kristine, happens required as investment full to it's the level. ] to settled base is the that which U.S. that's our in rate the on per program international We've line keep partners, office We're willing start that customer Jim. joint for cohort off the slotting and we're services. billion out many, that annual within office and years. priorities Jay can [ the the demand the customer, make, with program sync international and and sort all the

be were in get think way the our But and see meaning motivate today. have might a more we we jointly, and international make order including government book to orders that the mean that to that, industry, I investment. significant If an us would the I what increase incremental by above to suppliers, us significantly

that. any other color on So Jay,

it's coordinated Yes. I again, to mean, manageable. Jim's to low customer. hundreds it It's millions. with point, the probably of the the in be But investments, needs

line is from the from George of question Our Research. Shapiro Shapiro next

the that is XX% the in meet have we Yes. Jay, other sneak I'll yet revenues RMS, of would F-XX, QX margin relatively because which margin little revenue And production your quarter guide, a be to the isn't production implication pretty high flat. terms one XX%? in at you'd in one, on sustainment discuss bit the the on decremental where a can in you was versus stood

tell you us kind of that going if to just on So can what's occur. to cause

F-XX. on first and one come back RMS second the on with start the I'll margins Okay. then

an increase really I've profit It's in some some George, have think higher -- margins there And and will twofold expecting fourth quarter, through I we're function in delivery the do a profitability talked deliveries you're for some -- this the On program past, adjustments. benefits are lift. in them the here about give RMS, which of we there. right, mix

the close Development pretty a substantially, sales As just was XX%. sustainment really high quite quarter, far in F-XX, to as teens. up substantially perspective down in from really was the was up the production and

So sustainment, with been all long. solid on strong year there that's

the We expect XX%. that grow to around for year

And of moment, our next question the is Ron Epstein. One from please. line

there? Lois, are you still

Yes. go We're opening person One that moment. Strauss Barclays. will his line. I'm sorry, from the we David is next to

levels thoughts then And might on given rates or what asset the your around higher updated I and updated out with XXX. for think discount appears XXX. any you Jay, that pension guys what peers of came a weak associated it's I some interpretation position next want supported was, be Section I year are up or much whether returns? that where come think, your higher IRS recent with guidance see -- taking, Section higher of your to to

David. you, Thank Sure.

of view by really we an rights R&D treat not sale, a borne as are services. also the of The first risk position of acquirer the view as draft as contracts. they're to and one The those with capitalization, the on We plus deduct our costs as support came We that promising. And the continuing out. just R&D remember, it cost The they believe is associated short-lived guidelines and you really that that cost those restricted. activity.

far, approach. consistent we least language our to believe is, draft with at thus be so appears And the

we view positively. it so And

of on It's a As to the million XXXX. far go significant a about from next in One P&L. $XXX of as of is income things. will million FAS We're pension to going about pension, on with go pension reduction function the a couple of in year. see X 'XX I'll things $XX loss going returns.

second salary we're the benefits from is since -- that essentially freeze. XXXX plan amortizing the the And of expiration

And out, and run so significant see we'll so a those increase.

much that's will noncash, know, but you it affect pretty EPS. As

reduction. to side On of $XX slight the CAS little million between $XX a reduction million we'll see a anywhere it, bit of

the where we required contributions piece is a between for in And biggest we that But to XXXX. things if given higher again, the on where talked are, of Right FAS. billion contributions, be to starting XXXX. about From we are, it there expect $XXX some could cash we now, not in in contributions would $X if million XXXX. higher range, trigger stay anywhere

But sheet. use means, got an say, balance cash I pension We've contribution what to we've will we're in enviable it. about demonstrated to that our think and when position willing you that

And so otherwise pension ability wouldn't our continue view I strategies, that limiting key higher deployment limiting, contributions the cash to that's as and point. our

The next from is the Markets. Ken Capital line RBC of Herbert question from

made on follow Maybe, up to prepared a the just Jay, you comment in remarks.

made put I budget, deployment? impact? that and 'XX very of if think and you the does specifically, of can of a about is the around fourth short, the how you're not activity timing expected on timing shutdown that fourth there's you're sort but sort upon fiscal the of quarter Can quarter sort 'XX there much viewing the buyback thinking just And at the not a whether fourth dependent comment how around buyback in sort activity you potentially. the or of the budget you talk any quarter? how does risks shutdown, Or the that it's cash if risk of maybe very walk impact through in about

Sure.

So scenario with We're shutdown billion and gets issue we quarter. cause relook the guide If that this billion, done status repurchase. the the share do versus of clarified. in resolution at defer discussions pause budget in what another that. budget at a $X more find do a fourth the date, be time timing ourselves And in anything we've we of of is would take monitoring new $X to else that would that's $X just it, to billion until probably us so of an would such it

able us, would and get meaningful be things first So the fourth short-lived. a quarter see really then to through tells fairly won't impact in quarter. these we'll probably the believe If it not, that there. the like it here history and are push We just into

that could And does put situation to a just a the in in scenario, limiting It It at on a have we're starts. again, to programs. repurchase. self-funding be disrupted be you what factor some on programs mean? doing It share track. you take could can't could us But it shutdown also look occurs, does keep that to new -- a where extent

are Lois, still you there?

the next line drop The line come the Kahyaoglu did from of from Sheila's will from question Sheila Jefferies. Q&A. Yes.

Rob to So we'll he's move from Vertical Research. Stallard and

A for or Jim question Jay.

sheet, uncertainty we free more at to money than you're you're But shareholders the noted XXX% into going put and do of the to flow you balance moment. On fund. pension that U.S. have the budget ongoing returning cash more this

So sustainable how more to shareholders you it be to think going is returning XXX% forward? than do

a good It's question.

you If have, this here in incremental $X just XXXX essentially we then in $X XXXX, that it is the we're billion billion profile looking and at look authorization way at with puts equal ballpark, $X that billion $X and which billion in years. in $X in flow free assuming offer cash 'XX in kind of free those billion a the 'XX, flow placeholder us to given cash

the it, And viewing so way Rob. that's we're

years, But time, more back of XXX% over look we'll again, free at it year-by-year. flow. So will to next a revert over the of few cash it

progress given we inform we in the mix what working present and evaluate in actual we'll X do seen those happens fourth what and the funding, it in any provide into what you've the year. those opportunities pension and quarter, they all our capital initiatives did themselves, formally go continue in reality will last master here years, as the of with the increase to we As make reduction

line from of will from Seaport The Partners. question Safran Richard next come the Research

if and bookings could here assume we scenario -- what wanted unclassified. and better the both how optimistic an outlook, in discuss XXXX set with backlog X? and book-to-bill the take what classified year Again, to are we the on I'm budget I if is opportunity you interested to we the if know you happens So get is was next major what assume competitions shutdown see and growth no funding, the than

this over see I to strength award in line some to speak growth our next lot pretty about, a got but happening continuing we've can't orders activity of time there. in backlog. year we Richard, a period. which There's in decisions see We'll continue do MFC of specifics decent sight to classified,

orders and billion. And talked of XXXX we've about between $XX XXXX,

of come have to orders yet. We all seen fruition not those

We'll to XX year those probably probably So should something opportunities in we for F-XX, have that to continued is XXXX. consider backlog expect into Lot so we coming would us. be continue the next

logistics the our the to F-XX performance-based program we've In customer. on addition program, the to proposal

to continue in have get that dialogue. optimistic first we're cautiously And the can we We half of under year. next contract

think those to XXXX. for about So some key are awards

The line next Kahyaoglu question Sheila from is of from Jefferies. the

me? hear guys you Can

Yes. hear Sheila. fine, We can you

you're management So your Jim Jay, just given big pretty billion. ask wanted backlog, to just $XXX and team a confident

a big is You're to XXX% shareholders, number. returning which

talked growth low So about time. single-digit margins and some XX% for you've

F-XX? you what's I it kind changed wanted just it of that. on is So if just better, know just the Is budget chain? supply a Maybe given uncertainty? Is to seemingly comment backdrop is it can

be has we changed, much prepared a single in honest, not low -- to my really talked We about Well, remarks. that about while now. I digits for talked

multiple next lots where year margins, the underlying could in we we a classified have that flattish program, situation some On margin cause the variability. of generally could be is because

that it's mid-single-digit been But a We talking some still whether flow. flow see that's of free couple like, thing through working what present them XXXX and have but really year-by-year the to alter we growth. be that still path that. able free formally months. per been going sight over We've of do are we'll with fundamentally be headwinds, believe plans, We'll targeting we what January. doesn't work And know cash you that, in there. about. to share on pension there starting and we've we're and And our through cash with we a basis a the line next solidify to to Same

concerning is and are One world getting things the an situations geopolitical longer global threat the manner. challenging. national certainly and around that some In are refocusing there the significantly. increasing environment the more changing the term, and allies defense U.S. our Yes. on That's

digital going The is second on history, frankly. evolution both and of big at the before continued seen rate trend never serving that's technology physical human a

open as drive to company they're role platforms those defense, making and integrating that we're through to platforms our technologies pull architecture artificial for adoptable be are that XG, the try in driving the Century to take our all in space those leadership for the distributed intelligence, cloud, them have investing widely technologies opportunity our and XXst to this the we well on in hypersonic technologies, that hypersonics, whether advanced in as so And them time. is we're concept, we more technology quickly quickly compelling enable go concept using and through advocating as pull forward will

interoperability are then cooperation, comport our embracing international command which defense is the and which drives systems, and strategy, strategy. have our also and of increasingly that notion international linking And is the I control with third thing all allies we think

on So to there is some think quarter-to-quarter over company are necessarily advantage the I longer of that that term. long was but a Jay will won't as are give that think positioned take us uniquely us that I affect opportunities stating, term over going megatrends

And the line of is from our JPMorgan. next from Seifman question Seth

And quick Did talked then how for might per Jay, that then about guys or growth suppliers year? into you Or you. decade free any flow Maybe, that additional is mid-single-digit that Solid, about replacing big out the suppliers late in maybe kind next assume question something talk programs? The both for And seeking of and not? developing that one for when programs for contribution broader today's cash housekeeping one about pension your you XXXXs? the of is year. on next broadly, of question just kind existing and of be share hypersonics more

flow Jay for free part cash and Solid to share talk your I'll Motors there. take the question of can Rocket

to our apply is So to well. our that to into first broadly antifragility objective the chain in with as own DoD them supply bring partnership and

I and example, want dual into starting comes rocket mean then large existing supplier and that other GMLRS, it legacy And a in extend legacy And actually a our frankly. with for source, have solid technology motors, to to systems, advance. where will we're we so augment and when small

is onetime this So not a objective.

in even company important. campaign which and to way, our our approach is strengthening really broad own industry, I sources like supply think enabling a beyond our is for chain for a multiple This

we'll and and not can think that the decades even we this and to participants additional be with is counterparty. do this I roll as start So long programs discussions with a We a probably one-shot going years us but a on negotiations journey, and have it's on. journey, deal. off think We're in

on internal I flow On setting free up mentioned the to actions incremental share go be, possible determine what that cash art our per be and question that next pressure the January. plans put months targeting contribution for present would of in what's that coming again the would what able we'll arrive that. over is and obviously of Seth, to what the and XXXX, internal we'll we're And through at and pension that

And is Wolfe from the Research. from Myles question next Walton

on next Jay, The seeing clarification base that a margins the over several release, to the it risk, next quick case? revenue I there's that Should want XX year, And talked of Or guess, could you're points just you services years? then, what your basis that? the and about over clarification the in for I'm digital for XX time. And is on press and then a MFC. take today we anticipate revenue Jim, digital on what is of you is maybe curious, you services question to Jim. touch where way the a around vision

defensive but a these programs kind systems we're business is So will and And trusted, control range, and It actually. mission largely battle is we're be this command of That services with for farm. reliable notion starting in, already a it's of engineering management already. digital systems. wide like digital

UAE using programs on technology Call like that's it, as into then other that We well. expand AIRXXXX. technology have a We're program based core this in to DIAMONDShield. the

So we're to at mid-low billions that It's think, in, in business. mid-single-digit already this point. I the

try platforms up other OEMs in other to to itself, for mission our provide to as And we're of for platforms other ramp again DoD. connecting from that going and solutions technologies the add to that networking, well as

and ultimately together come that air the capability for physical will and technologies digital air-to-air missile mission warfare, customers our and a combat, can integration. say, way the surface, in, in advance cetera, So et defense

of will X every others, the with. missions, digital of want partners, X kinds of and we we own advance and work cetera, physical technologies from months of to that to et our Those combination

today the but material point that's So control we're for those in again, and approach, a systems them how is, management have very the and we've this we starting augmenting got future. and modernizing long-term and good broad command already battle very, that

Okay.

Going back margins next for on the to year. question

on the be of underlying margins, as of impact timing. margins, the it's for let excluding question The MFC it provide sake expect and next Just MFC programs, of margins flattish. clarity, will the year, drag to we a me I a mentioned, and program,

more be as to the XX could it on lot And that have again, out points. anywhere close So between we'll basis a XX we clarity year.

the of is Goldman Sachs. next The from question line from Noah Poponak

you the for year to ask know but I you and wanted the about like margin there, quarters Jay, or also concentrated expect to shake I in if sort the MFC what guess more state with you did looks losses? of next I out would don't the margins, year, just where it

know -- that you've just if more LRIPs Was then talked I on little could here. going is talk -- got this I recently is also a that's about with price seeing prices fixed awarded development. know little you I a while been wondered fixed something understanding fixed no program risk because how I you how about what bid overreading the ago. longer And about I'm price bit that having missile towards also it than little you had am the out I a the shifting was bit there? customer realized? my contractor? the Is -- Or

just there. me part much. really referring Each that of attack because we pursue individually. review to posture maybe not and There risk award was case, over weapon the a standard programs. decided X to In of stands and fixed program Well, the take different are thought development circle you're it I The let pursuit this then profile was we own, risk the on too -- its and that the those and price back. we really program second think

particular was backed that development On this program. on And program, program, the a classified off. cost-plus so we

the So much risk development there was what not really cycle. associated

to that. with these are rate we're to associated There production starting hence, the production we're pretty that low aggressively. priced were going lots start initial see headwinds And --

program. takes long-term we And sure make be would these these a accretive mentioned, are -- that types of know Jim what NPV we to on this As it programs. provide

that, monitoring able deliver and we're long that track and we'll term, over we be the so And confident to that.

we case-by-case are these of type again, situations So that pursue.

back get to year. margins have on MFC probably next we'll you -- the to specific the On for

back you I total think company, impact front I just MFC. the of in into to on we XX XX can But can me. for it what back is have that into don't

programs into things. no done, on that to take look perspectives into higher been total program I to you not Noah, what and rate factor at midterm when balancing initiative hasn't risk just price And the our risk and or going account here, here, Jay either place approach a customer's holistic matter imbalancing, also settled yet it on taking take a we'll the forward taking I long-term because -- but of program ascribe do you the production where initial just these kinds the based development that fixed approach because initial is is really a we're especially take we seriously short own look account, concept experience give at on the in we comes on context risk as would and fixed value development is we we opportunities the or and going production both one the forward this here rate . And technology first think, management. to if of price are

we And top as more we X have Lois, Okay. approach of time hour. the I the for think

come line from Citi. question from Gursky And that the of Jason

are Jay, a Jim, supplement for to what to Taiwan favor, all of you do wondering idea the demand of today. mentioned us if in us a lead you of in a and things would your And to context the kinds shipping Taiwan. remind just here. going high you kind related prepared of for think of into more to be what do wouldn't international you're remarks, revenue I'm in supplemental you

in you the domestic of expectation business, us give if of margin program. all light equal here higher the just international than margin would, is of be being business? wondering we international the today could on growing was faster, your else international expansion a that If quick large I profile F-XX outside is kind margin update see writ historically

aware that is everybody F-XX modernization. So Jason, production on signature both think is I Taiwan, program the in and of

integrating So of the to and But defensive and also available that's Guam. with digital Guam of and that of designing them we the others, sort into others just missile award integrate aircraft the to like we're provided year, kind technologies like won Defense provide Taiwan, these for we approach comprehensive Taiwan a that last we we systems a ongoing. provide defending approach

range of to those wide the with if this when export a government digital with any be will released help The U.S. define FMS will could there Taiwanese be for the physical So of procured and time. that other products government. come over would What program to Taiwan -- and vehicles. and

possibility for as could think given So and in tensions will supplementals be But look the Israel as Ukraine. we a like. to, it's, what that speak rising there for I to Taiwan government said, I again, the can't addition that

incremental international that through the U.S. the to been it's going opportunities about higher in margins than U.S. for case, the been are lot DoD-type higher this we've military business more have margins. base And would contracting margins, But really so the what But government are of continue historically, talking expect this a they margin. foreign customers. are like which I sales on

the U.S. kind the so DoD, while least -- business be we probably because of are will they limited to blended of at margin limited FMS. profile going kind And than see incremental will be it is that's a higher net base

All right. Great. Thanks, everybody.

turn the some over final think back Jim call for So top thoughts. the the I'll to hour. at we're I of

Maria. Thanks, Sure.

I deterrents our enhance want that for And congratulate really do world these to the going for and of the thank employees of they're pursuits, country more we I continued we everything together thank after dedication. signature our across They're today, dangerous all They're around to technologies. their in. advancing sort globally, digital really world before new the supporting programs. I teams all will think conclude doing. want and especially in live our

all reminded again a doing and cash is deliver on make We designed that you're sure to focus come. go along interesting the well. yet years to return with per that to time, make also an for are to we're shareholders Jay compelling really share, business expand want here you flow to you and sure value that as we're getting dividend I everything free over we the as the to trying many

that this call all So for again on today. for call joining speaking Lois, thank And earnings January. you you concludes us morning. We next to Bye-bye. forward of look in the with our

Thank you Thank conference for your and for and using gentlemen, now and does may Conference, you participation disconnect. AT&T today. that you. Event for And conclude our ladies