LMT - Earnings call transcript Q2 2018 | Lockheed Martin Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Lockheed Martin Second Quarter 2018 Earnings Results Conference Call. At this time, all the participant lines are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's conference is being recorded.

Now I would like to turn the conference over to the Vice President of Investor Relations, Greg Gardner. sir. ahead, go Please

Greg Gardner

and our I conference second Brian, welcome call. like everyone to quarter good you, would morning. to Thank XXXX earnings

Chairman, materially law. release may securities some call projected Actual Vice statements filings federal from pursuant President of Joining from differ Please Marillyn Chief press those considered factors cause the Financial Officer; may today's for the forward-looking provisions on made materially differ and those and statements. not forward-looking Bruce that President Harbor to in to historical of Statements our are the of in today's and the Executive results me made in Executive are statements. and SEC results the and our a see description our call forward-looking Tanner, are Officer. Safe Chief that today Hewson, are fact

on posted and With link to call and charts. during that, the our have call we our follow turn over like to that I at the We our access plan Marillyn. charts Investor to to website the Relations address on Please the website supplement our to view today would comments. click www.lockheedmartin.com

Marillyn Hewson

welcome Thanks, everyone call morning, and our Greg. Good today. to

second some joining you as We to milestone. and noteworthy are our pleased have celebrate key from Company we quarter review across us accomplishments our results, operational a very

and to achievement our value dedication we the my also long Lockheed proud to the corporation congratulations as our and innovative organization to I to focus in capabilities team continues strong of financial and very returning term team. our their creation. to appreciation The I begin I while continuing am offer Martin to growth want on Before Lockheed our stockholders Martin second value continue customers for deliver results of quarter

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Both in of with Defense the XXXX to an Budget billion Bipartisan the build which Senate on appropriation $XX FY included XXXX both budget year that for the XXXX process. XXXX successfully XXXX and cleared dollar XXXX. additional DoD commence caps bills Bill of the quarter FY Turning Congress XXXX respective this later Once top year budget, Senate of committees. recall defense floor and FY first $XX to will raised XXXX. the budgets upon the conference FY appropriations you'll Department the House the Defense Appropriation will based Fiscal the briefly greater in passes growth chambers their the than summer, significant increase billion fiscal Act XXXX have passed the from the two

forth These additional the need the the These XXXX DoD of which original have presidential [indiscernible] the increases put of met up has for] into the recommended bill additional law. be appropriations our jets, budget to request Littoral in XX additional to programs. aircraft, X signed bill on a target XX interceptors, total FY still over [were and the additional be and billion [ph] additional FY the must Lockheed $X funding Martin conference to X in active including X settled Ships. excess increases legislated caps, XX will above agree-to-appropriations programs for in of F-XX are and number to XXXX Combat to both funding Blackhawk THAAD X budget committees C-XXXJ each While helicopters for XX

portfolio are has we of the budget However, by to as receive progresses. support process very continued encouraged our the

current program four made XX honored to and into international delivered and I'd F-XX four an two mark welcomed our place its program. U.K. Defense they as combat, transformational this as roll both aircraft. to in the how were Fort Strike Also the lightning community Royal STOVL Texas The have takeoff the corporation U.S. close the will announcement Ministry’s take achieved quarter. XXXX Worth a to and its we In strong morning milestones U.S. In significant I'll F-XX four events used host quarter. F-XX on, aeronautics been have joining We this this prepares the our shown for have landing a training Turkey These jets at and ceremony saw progress long discussion variant this the standing take been anniversary. the short we ramp we're to its quarter, with to rate part its replace pleased several first environment. the XX we be and at three Slovakian Fighters takeoff like Moving RAF expect facility. planes Israeli Force will milestones operating hundredth momentum. and fifth shores the conventional both two by $X on F-XXB Adir be in delivery The out to forces pilot stealth deliveries aircraft past Department our In ordered. at aircraft now year. underscore of first stationed the demonstrating Base selected Kingdom fighter its this one of and and Air the the Beginning time first F-XX a celebrates the by The and the F-XX its deliver full has the marking program. in proud Joint production. support we move June, latest to United XX contested billion. end these our generation that update has vertical member already noting as Hill were operational Air May, used will mission Air Base. We continued for exceed F-XX to block inception. be hundredth aircraft in Force announced June, been our delivering Force Turkey the fighters in anticipate F-XX now across the landing deployed highlight their has finalize its at planned We've XXXX will we XXX the during force approved this will we Luke State sale total, Royal we Navy in jets agreement which fleet as initially with with Force important production significant program's Force capability the towards Air in of aircraft received the to Air by state-of-the-art

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Our built for of corporation mission NASA's every Mars. Mars XXXXs has a Viking mission the research in NASA first and programs part been we've Landers to since

our into and Bruce innovative program. to technologies excited to discuss InSight now second for over are and and continue spacecraft our the XXXX. decades the our turn each continue review of we call to new outlook performance heritage quarter experience I'll with We updated financial to incorporate Mars

open for then up line will your We the questions.

Bruce Tanner

everyone. morning, good and Marillyn Thanks

included web with release earnings accomplishments, As I along we our charts the please highlight, that financial our today. follow with key

particularly begin with first Sales pension our for segment the short, financial and three quarter. from we from Let's our exceeded profit results the operating In our building upon the in every an and were of strong overview operations for excluding results quarter. and expectations contribution chart metric quarter cash strong. the

XX% making operations accelerated however we contributions when as discussed. we to the billion in before cash better This the from have spoke previously turn dollars generated pension much negative quarter April. quarter, tax slightly billion $X.X $X preserve we our During last in in to cash we the we than that trust will contribution projected deduction for was

Our billion will million $X.X end this quarter, by We next and stockholders count $X repurchases for make and billion nearly our quarter the final dividends the more outlook outlays again we million our almost operating $XXX earnings $XXX full pension contributions dollars through $XXX year. from returned as of shares our in increased and million accelerated for planned through per share profit, sales, year share than we reducing cash a million share operations. to

X% second pleased very of On Chart year we of year. with combination same last the in results. factors. our we're segment grew quarter the sales the operating So our year and compare a X, year's results for by quarter Sales the profit this with almost over first driven three of half last

win new rates planned higher than First, on programs.

last volume profit in we Control of had higher lower at performance and for driven quarter from Multi-Year seeing VIII. portfolio performance grew satellites. RMS Black volume air of sustainment These are our classified offsetting higher new up the international expected was line fleet ballistic with to for in reduction X% improved charges and production budget compared Multi-Year performance the contract C-X offset most us cost retirement in the CH-XXK risk forward. established due that more out partially the recognition current RMS volume. performance for quarter the I’ll profit quarter that number on increase of Sikorsky to significant this contracts expense F-XX by than the IX These convert risk operating the and on by level which both with almost increases better quarter compared environment increase, the charges in volume revenue announced Control commercial more had a the growth we’re are missiles XX% year of sensor Black volume for Aeronautics resulting better year’s Hawk higher performance as where than along to the into in point a missile Segment planned lower the Fire quarter by retirements quarter, XX% with portfolio primarily corporate in including market performance and flat IX year. with and grew and to the profit highest increased more next under Hawk Space Multi-Year in earlier improved the Sikorsky, second in recognized more with driven offset lower in X% with than results. competitive occurred volume the production across exclude highest several grew last profit $XX due grew in lower offsetting lower Second, increases defense rate a essentially in Missiles results. cost with last across was had results sensor of missile growth than X% Sikorsky higher restructuring on tactical and Omnibus some volume sales X% with an was to integrated itself severance be program large. business, offsetting than our that business than highest sales on going while across more were programs of again unplanned Missiles at this quarter helicopters F-XX in And driven of Aeronautics associated on billed quicker for the versus quarter improvement provision by X%, increased and charges in accordance warfare awards Space’s unallocated million sales awards. of practice business. are due provisions improved almost the more and XX% position and higher last methodology. the increases vehicle. a sales over combat programs and line systems activities volume at operating third, Fire RMS the volume sales. and our radar which

in per Chart to Turning earnings quarter. we’ll share the X, our discuss

Our EPS outlook tax On year. I results and activity compared a our provide quarter of $X.XX a that the operating rate includes $X.XX driven for $X.XX segment last the we in than EPS earlier. the the by was higher with The profit the mentioned year. revised year, for quarter and in severance lower last higher charge Chart X, $X.XX restructuring results

our for billion million as and outlook by strong outlook performance profit the performance half increasing result segment the are of $X.XX We the will our by as continue to see sales the we expectations well. our first $XXX strong in and of operating in a that half year second

the our and operations of next discuss outlooks area by We’re guidance each for EPS increases Chart those sales the few business also increasing charts. provides will year. cash and our X in from

account increasing new Aeronautics a our by area sales Chart overall. million at business increase for areas Fire segment We’re for – Missiles and Space business increase year. for X largest each next both outlook $XXX our shows $XXX segment four and our by $XXX the for billion representing increase with outlook profit the million $X.XX Control million, and all to excuse new RMS operating increasing the with me,

our million Chart increase, at a of with and earnings provides respectively. and share outlook $XXX increase year. our areas by $XX We million and and outlook Control business million operating among X prior the Aeronautics $XX reconciliation current the segment and an the Fire $XX profit million, profit per space with for Missiles $XXX million RMS also next are having largest increasing increasing

resulting expectations provides continue enacted long Jobs our lower a profit a Cuts $X.XX charge in our and Our restructuring by XX as miscellaneous update several incorporate projected operations and that EPS change most with in implementing legislation $X.XX reduces tax Chart last term an XXXX improved EPS Tax segment from EPS. along the Act $X.XX increase of mentioned refinements improvement to rate to outlook. tax rate a from of cash we year. earlier with impacts lower and drives severance our operating by The and

from now the to cash XXXX very our the equal three measures chart increase during goal outlook We’ve in to outlook strong with have in to cash allowing on our an we And half information than for October questions. increase increase a see or providing overall Given than year our us billion representing XXXX for key trend $XX.X XXXX XX, pull year a three finally XXXX from in ready With we expectations call. for your for future our years. updated of our forward rather financial increase we're summary. for that first greater we’ll And operations, reminder, be a all our upcoming as the had full-year. be the

Operator

the [Operator Research. Instructions] Please comes first question with ahead. Carter today from Our line Copeland of go Melius

Bruce Tanner

you’re there, Carter, are mute. you

Carter Copeland

mute. you on very guys. indeed good and am morning much. I Thank results Good

Bruce Tanner

you. Thank

Carter Copeland

I on just the Just about more a sustainment tell encountered you you capability Bruce if the on you could that in little us warrior and ring that the bit to can fencing MFC give there charge of mind? wonder were color keep in what in just, anything

Bruce Tanner

question, Yeah. the for the comments and Thanks Carter.

working new we’ve essentially and vehicle. sustainment as on speed fairly new turret sure the on make and a putting is significant Warriors a a it the – combat and purposes turret operates that program with effort it’s well, at to some fires the And capability been on our cannon it is armored combat taking of for essentially up some it coming new sure make new developmental Warrior intents cannon a electronics, amount legacy So vehicle the like.

for a a this. the we obviously of it to There’s some result charge. that Carter this think production into this side hopefully in that’s effort had as vehicles this of the results to have essentially So a with from development modify will quantified Army move that We follow-on U.K. and issues is contract of will on us. the and behind development aspects and expectation come this production that number conclusion put development the the these service satisfactory

Operator

go line ahead. Baird. Please question of our from And the Peter Arment with next is

Peter Arment

way sales Hey think planned bracket maybe morning there a timing guidance said in of Bruce. sales just rates win higher is higher you of that the thanks. Any how to the the awards? given pull Bruce, any you color could would or context so it do there Good view if when wins, that Yeah, you and is be, in that Marillyn give XXXX we forward you’re profile? of there the Is to information helpful. to terms trend the of in going that just this earlier

Bruce Tanner

in Look we of perspective every you there, I win out to we’ve the expectations win we’re ourselves the competitions think the and typically a enter I but XX% sort had rates XX%, you I but as for don’t into sort high from and don’t competition in said win success them, going case. most year thinking we win the single remarks, the more prepared with we that’s us should of probably think of of always of go know

like where the And Here we’ve said as had as particularly awards haven’t well. but Fire we’ve Control earlier, higher just as Control. we a not experienced remarks that those habit point the much seen recognition the for actually Missile some things happen protests as award rate like in I expecting the exclusively gotten than perhaps as in and that to and to seen and into delay maybe of Fire delayed Missiles we’ve get historically things and of

recognize about here, you the that this about sales we’re to we a maybe incurring and this our this earlier under And is upper think goodness talked that’s for as expectation because both would the so as pure recognition out in awards both of activities little win revenue in two an are rate. years, be cost. in the higher years two well. getting years XXXX methodology again put forward, essentially those receiving if upper the So increase increase I is starting for pull mean year, the much bit are but and contract to is Omnibus the already is of that my not for XXXX future how of both resulting a Peter future But almost we recognition and the expectations is surprise then and also for those

Operator

we ahead. Spingarn Suisse. from And question Robert go a the line Please do of Credit with have

Robert Spingarn

Hey, good morning.

Bruce Tanner

Hi, Rob.

Robert Spingarn

I be implied of aeronautics and you remain remainder for the fairly a definitized I But making to on LRIP guidance year. wanted guess in the around about contract good margins the ask XX. to progress XX.X toward look you steady

done the Aeronautics wondering generates was there’s to the is, some back upside positive rate? I possible the that it’s on end what in does not of or booking it EACs is actually F-XX once year So impact contract it

Bruce Tanner

in Rob, shot a take she I’ll comments some Marillyn and at has can that jump if some. the

So of some came on think XX probably seen the making that you’re are we out progress, I press LRIP there.

of on ups we’re our of are I we’re second be in F-XX LRIP because think we typically expect that the along and continue most of half perspective portfolio rest and opportunity XXXX. of expect step on of the it’s a at we’re associated XX risk not XX it of the contracts hopeful the of of from we’re wouldn’t I’ll quite the to rest will. the do we huge see to there’s primarily bulk performance retirements the point, previous not you of or impacts the the least the expect performance optimistic continued activity an at Rob. that this in good I final if have counting XXXX year kind margin but if on LRIP say to than you further that throughout rest the and on We have throws will XXXX to consequential contracts bulk sort in honestly,

Operator

of Stifel. a the And ahead. we DeNardi line from Please question with do go have Joe

Joseph DeNardi

speak from but Thanks is? left much. Thank XXXX the this just Yeah. and very Bruce, year’s same. Can just you ops cash on increase, guidance guidance XXXX took why you that the at you. to

Bruce Tanner

that it’s because is the just And of the Yeah, XXXX total increase so XXXX we the and what haven’t a information the answer for million simple year only planning obviously hopefully updated reason our question. Joe, happened to We XXXX. three $XXX increase.

that So I in that. when XXXX similar a XXXX we’re and yes. information to is expectation seeing my to answer the the in into translate was least beyond. trend into there in continue going into at and we’re to hope of to asking that portion the is the XXXX to October translate goodness positive give that but impact the of XXXX the think And is you talk relative beyond to lot call for we XXXX I give Peter seeing And this of inside year question is there the rest

Operator

And question we line have of go from Citi. Jon Please do Raviv ahead. a the with

Jon Raviv

Bruce, Hi, good morning.

on point. Just to that follow-up want

the growth put think XXXX, you of sort side you’re and think a beyond now? do from this are budget this, that range well I win to where terms year of XXXX of in on I in and kind talked previously button already expect you about as rates just speak because everything X% acceleration on seeing XXXX to X%

Bruce Tanner

that you in question do of about going be the into my answer the what The sort and higher but past. we we’ve expectation that about and Jon, that previously is over seen you into expect year Yes, quantification talked years the have this a I’ll more don’t of quite of those XXXX. in the happen the expect that telling an through yes. increases everything increase that hesitation forward And bit of is hopefully my than October. is that we inside on everything yet quite again we’ve again is, only based for to XXXX we’ve will And give talked I inside that numbers

Operator

the of line with have Fargo. ahead. Sam Pearlstein Please we question a from Wells And go do

Sam Pearlstein

Good morning.

Bruce Tanner

Sam. Hi,

Sam Pearlstein

I imply for look is if has quickly to for margin then is at the higher the could address sales you with second Systems, Mission the tax Rotary lower can second change And secondly a only guidance down this the say year the just half first you materially something this first understand if would and from mentioned which there? a if in you even and you so the wondering happening profit mix, just just was what there the the you just half, half come overall could tax in rate year? what’s in expect unusual is us help pretty something I half, about

Bruce Tanner

Yeah.

think one as I Sam. that well

one level XXXX of the say think update lower expect you one probably example, write up is what XXXX probably tax the of deferred the XXXX bit out and do to occurred forward what years over to a we’re down in than XXXX XXXX us in you of rate the XXX. kind would in tax that not That’s beyond. looking expect that just adjustments the There’s so the should our into I’ll for mid-XXish where to that we XXXX. and onetime in rest year carry asset And give just adjustments. little going sort some tax of you got of some true reflected expense actually that

a again this little year, think forward about XXXX go probably So than XXXX. and higher mid-XXs we that as into

would RMS, to On we say the mean pleased reflects, that the I in [Technical the you’re some half of of prepared a I of that the business, think risk I and very Difficulty] I right, my the that year. half really in of And down retirements happened we’ve in going performance remarks had lot first the as math Sikorsky Sam pretty what’s it’s are RMS year every strong of talked think for side, come entire the for line some portfolio really, mean virtually much first I with the space. experienced plus in we’re retirements in try as half of about the across so but first the we replicate just level at right watch say we year, we’re the we’ll risk the up planned the we that just second a half, in did can on and or half we’re risk improve And continue to first of we don’t than the whether question the that what not occurred level higher that the as now, going see sort as same of first to of planning of optimistic half. forward expected in least I’ll retirements

Operator

do we with Bernstein. Harned a from ahead. And the line have of go Please Doug question

Doug Harned

yesterday you Can about Thank we that going the you peers back at toward now things. close to given the wanted on looking pressure is, What you. in to buy. that LRIP was What going trajectory on Turkey. margins have over could block Turkish Congress rates? on then point should second, your delivery looking years? two don’t customer the effect how next and XX know this supply to Turkey, to your would where just agreement talk are how a I F-XX, the you an One go pricing, deliveries? forward, few the I know on block in getting the and that go chain from is delivery blocking a And there think coming on of the

Bruce Tanner

probably on maybe second bit a that the over a to of question. little and turn Marillyn bit little park I’ll second the So, and a I first one

still final think the of buy LRIP we in with that deal previous improvements margins points one those savings XX of hopefully get is in deal change I’ll our expectation I on a we’re your would F-XX. chain the forward, demand. probably is few were name question, same aggregated it do combination years F-XX block XX that XX the couple think improvement F-XX This doesn’t about buys the block as of on at stage sets XX, see think cost the going we going on place. that were Don’t improvements our you and rate accomplishment indicated about margins good be forward. a And buy that going to I next see sort we expectation XXX as of there a this talked F-XX a said for of to performance and were sort I’ve as all fact expecting combining LRIP So you hence had we questions, to to close not basis improvement LRIPs as sequential supply say but know big XX, those that see years at in of the be trajectory year-over-year. that on associated for the Doug, on least that which a forward. the past, get I seen of there or sorts talked that expect we’ve will that

delivering, essentially continental aircraft with Turkish continue deliveries deliveries as to implications, to deliver Turkish initial in of States the for the the stay F-XX actually we’re is purposes. F-XX training would is United chain expect we to and As supply every international of procurer

a pilots be aircraft level get to sort shipped they’re in before to overseas. of international the the of able proficiency to stay United States the So fly typically

the country. those for That continue we’re So deliver sales expectations the that Martin is buy. that the under we’ve international to those until those normal U.S. government leave opposed my Lockheed have is And guess is arrange deliver deliver got This obviously bases government this deliver and every our in don’t expecting. This FMS training direct and those contract U.S. U.S. would aircraft some sales, we would but agreement. I military a is to purposes. for to a standard aircraft craft before into be practice time which contract this air U.S. go we is foreign commercial and not we’ll the the one says continue between the so as continue

Marillyn Hewson

front, chain supply on that. So will address I

the at Pentagon. we’ve we on been looking that We in Turkey, and we chain, would with the discussions most components that that. be around and levels chain. all most on The As of the hearing supply what the of dynamics you’re recent produced impact so at been understand senior supply looking do manage that international have our we’re parts being world, discussion always

and the actually mean support plan going official come But to it’s in a forward. Defense to back got comply And frankly comply and as some said range government U.S. if of at of action and vast that days. look get time before some program XX with have Bruce the do any with is so Department we’ll we I book we itself, we the guidance

So U.S. going what close continue in we that be plan see forward to is dialogue the government. with will and

Operator

the do a from have with Buckingham Safran go Please line we Richard And ahead. of question Research.

Richard Safran

are good Bruce, How you? morning. Marillyn, Greg,

Marillyn Hewson

morning. Good

Richard Safran

F-XX here a related have I So bit question modernization. to of a multipart

both the Aperture you’re expected you’re I of it that away the these is capability the are won in cost How capture took making Elbit over version to too further display discuss Northrop, know time? of from upgrade airplane more the long up away the retrofit in future to our if of the airplane part might expect could you’ll just Raytheon, Lockheed to want appears bid. and about much System one Do margins? replaced finally, how awarded taking cost to just at for not changes improvements, recently You that you should the come least it ago. we And F-XX. wondering you if L-X from improvement and that it Distributed thinking or since be fleet

Marillyn Hewson

lot through components for along we program. aircraft, we itself our we how question. Bruce gotten Rich, mature more the then and are reached term. flight we a aircraft that fill program, test longer I’ll That’s of a and go as of we that multifaceted for start and way look the is the we as question, can and competitions for to mature program see basically the managing do. in technically thanks now on this look But And so as now at well very best at value next job having the point much can

others and do and And continue then production of are distributed so that. you at a on displayed we’ll that we’ll to program some sided and system look the a with those just course normal

just and development. will will additional any improvement the some I opportunities looking continuous constantly for might be you overtime, that address think answers at we other that program cost look of we want of it. like open to As up program Bruce the side that. But

Bruce Tanner

Yeah.

was incorporated of So Rich, the is why I question part think That’s not that. want fleet, not call so retrofit obviously your to call do they this. JPOs to that’s another our

sort existing of as with do this new and other to If if modifications to you’re say combination the we’d aircraft term to modifications opposed expect our aircraft I or start and processor the retrofit I’d all. new there other a go expectation, display guess do wouldn’t near system. see is this with asking my would chance to and in this My replacing it in a the downstream processor be at

benefit, a costs, premise is it it going in business was increase the to of more the your your way flying. production to sort associated of think is of keep it. aircraft, right. be the last retrofit characterize lower we as And sustainment to a normal forward, cost aircraft double the lowers is question also so We sort cost probably capability just this the opposed changes course So I lower blown I’d say do and margins to with cost this lowers of I think sustainment expect importantly those full these

Rick We’re think of banking as that assumptions. and you pricing should under it on those we’re

associated this case sort in expectation So to we’re the to have impact U.S. wouldn’t this it activity with in government. because out margin the of see will we of pricing the that expect expect to pop crew benefits we the that

Operator

von with Cai And go a have do & ahead. of the Cowen question line Please Rumohr from we Company.

Cai von Rumohr

Yes. much. Thank you very

the you and mid-year in it where range to was as is some be Can at this year-end. relatively opportunities where a there? the line expect it by foreign of you year color might backlog end us with your give at So on sales included

Bruce Tanner

at Cai. that. I a poke will take Yeah,

big that the perspective for The we of a the is of the large third depended expecting Difficulty] second You’re are expect million that be that some on awards. block F-XX dollars of from half [Technical some billion obviously billion piece that about year would to We where of order or maybe between the billion now. largest $X an north quarter million right obviously chunk excuse $X buy. of $XXX that to of – $XX

don’t in You that should of I $XX-ish know that exactly is the somewhere what billion plus is range. think

half second that’s the of So in order a single that very significant year. are expecting the we

Air Saudi We for obviously couple things and Arabia, we the for the for have awards Force some trainer competitions also with the the replacement of of for kingdom a that like MQ-XX have Navy.

those swing new as in the $XXX would we of or as year expect get whether the of not to any between size could we’re year-end. success of the billion or we event award. competitions north to see obviously some now backlog probably depending But initial So obviously on and

Cai von Rumohr

Thank you much. very Great.

Bruce Tanner

Thank you.

Operator

of the And ahead. we line Please go Bank Epstein with America. Ron from question a do of have

Ron Epstein

Hey, good morning.

Bruce Tanner

Hey, Ron.

Ron Epstein

the how the that the program fighter generation gen maybe a sixth how in target This Airbus a to on you about maybe announcement do When is fighter. we you what recent generation that is term maybe does about call little both beyond look impact U.K. fighter at should join a tempest forces of of mean think hey whatever say, have pan-European the for market I longer Lockheed? you mean And of guys and When kind sixth a you sixth I fighter concept think question bit recently and program? F-XX, moved you we more guys.

Marillyn Hewson

to and came about I where new the it. Farnborough Royal about chance U.K. and some Riyadh leadership talk of in Well, announcement was Tempest made from the senior the just fighter I program Force to that by a Air the had

fighter new where to me comments this complement that a it is program that, the F-XX. the You but is they focused yes to are on

see for the program as don’t some we replacement time F-XX, it a I take to do it’s a that. development So mean going beyond to

their the And so supporting of any course to help investment and trying discussions are we they with industry engineering can make plans additional for about what we’re that’s the base and innovation them more that in learn and good for an U.K. in in defense and how aerospace

as that that. you they’d might hear say participate Just they to like in have

going up we’re bring from I highlight innovation is my front forward and some billion and $X organization they’re putting in capability I on XX investors development Skunk we Works the as program particularly the to of the XXX record Today they’ve they’re jets for original that to were F-XX. think out standpoint solid buy. they phase. mean gone still I that. path remarks with just the their The U.K. earlier of in looking tremendous some

next I from brings capabilities. understanding the of at is forward, forward they do don’t concepts design to transformational Anything My it Bruce see an them will add? that on their we as the continuing put that a might U.S. So generation fighter. sixth the to it impact on just focused as engineering lot look government keep want you just we F-XX going the see based on

Bruce Tanner

we our on allies so potentially that ocean this I And those said I might said actually think the typhoon opportunities. into the capabilities large partner can with think You think cross replacement. I know I Marillyn is sort F-XX to across I guess healthy actually that future complimentary share that the add have on capabilities extent as also Marillyn and of developing we and is to speak to is this

that so a in the are participants thing. staying that countries next our generation this those of are with the industries So game positive partner innovations, is positive allied are the

Operator

And of the go Kahyaoglu with a Jefferies. ahead. question we do line Sheila have Please from

Sheila Kahyaoglu

Great Bruce. and Marillyn morning. quarter. good Hi,

Marillyn Hewson

Good morning.

Bruce Tanner

Thank you.

Sheila Kahyaoglu

and a touch cap wondering of and XXXX any quantified recoveries exciting some to question, and bit contributions I is less there was if have pension you upon term in pension longer drivers, beyond? could A the of way

Bruce Tanner

Yeah, take Sheila, I will one.

on a the the so what year the said will we’ll been into through assets, obviously versus from I’ll ten hope like a year today. have months here of have get half looks perspective call the what October through be a I in return of October of inside ten better we’ll first close what that I that our almost the little indication by So call, better

think sensitivity where There’s should the fairly the and of on at don’t As only far that billing benefits of to forward, of influencing defined hesitate XXXXs end plan. you We if be is cash I should again we’re so start previously, of of and contributions the some just you less with I cash associate the in the XXXX. biggest will this close really making driver to the legacy going minimal to maybe to being going sort not know number of today. essentially year we returns. parrot said are now asset because right I’ve think side, in workforce you is relative what contributions of the relative zero contributions a XXXX, give represented contribution recovery outlay cash where in side to

of stays I years. number think we’re at billion what few consistent fairly over today. That cash happens next around regard to $X.X without almost the

at and you plus should you about the XXXX, way million XXXX minus or level it. it’s million $XXX that’s start when about of or sort $XXX there. either looking But level that So still maybe think

to we’re you in a have once perspective. the October I’ll So consistent, pretty cash better more fairs return going inside asset end we an year give idea where from

Operator

go And from we ahead. the Seth a Seifman with of have J.P. Morgan. do Please question line

Seth Seifman

cash you is question cash actually a kind also you that we I morning. kind can about XXXX, freeze like was make, the bit little are to conceptually, Thanks costs wanted the talk to ask plan pension. contributions whatever matching much the those in when cash, allowable could of good so Bruce, understand is and guys very you still related there pension for any we or the more is from receive you is in there of XXX-K That or is you kind the do time over freeze next contribution to your think the about then whatever of then that, or you maybe plan, and to the four is government what it goes the that at and balance just zero? And five gets take how that you pros cash fully be years side, the funded? happens flip side when plan on the should of

Bruce Tanner

Seth. Yeah, so question good

a So full on just said, to pension do XXXX. freeze you repeat defined we our in what plan so benefit

answer that the the is cash periods. asked every thinking no. I’m the later credits benefit and of have question, of the question if recovery out particularly in you of about of we liability but will asked change Sheila’s smaller get you I talked that end the benefit loud And about will that is the and go that. much I a XXXX year Those our they You if continue, start that plan, of defined a cost the our here I prepayment freeze XX-Qs disclosed number as know of to defined understood we back time particularly beyond and you with think year question, of essentially the contribution pension does to the a this pension lot recovery they

benefits date and credits billed those are recovered the defined beyond that have get just liable need other as extend accounting by any those So the and in those somehow cost Lockheed do pension is freeze. Martin regulation. We the liable prepayment to and other of standard contribution cost

forward. So sort of no going change there

a plan both both recover and We defined pension new perspective benefit, remaining the contribution any perspective contributions. will new liability from contributions a defined liable

from outlays think when we to perhaps going a funded, still have get the funded. another take would think it’s while you – and to was that of question fully the fully I contributions sort So

the think still it’s of I So sort I post XXXX. last looked

single the still to think funded. do far get expect I cash said can pension we in associated just with about plan fully out of in look until excess every year have past as our outlays recoveries I we our as we

So I’ll stop there.

Operator

question have Poponak Sachs. the ahead. from Please of a Goldman line with we And Noah go

Goldman Sachs

everyone. morning, good Hey,

Marillyn Hewson

morning. Good

Noah Poponak

a sizes revenue in Bruce, it’s beyond May relative you can XXXX XXXX, in the XXXX could budget I pretty say been pretty super that the to lot split the guidance now like XXXX it’s could something in had pretty and impact or broad other cycle significantly the past. be business, almost have raise was cycle that to saying company but across And the you’ve unlikely but in see XXXX of given you guess was I what happening we into business. raises that the shorter maybe if like missiles late nature I even of be event the tactical based, perfectly long think would I

even bone put maybe seem. win across meat few business? rapidly like little give awards, super precise mentioned know the could I curious to just change faster I could don’t if examples, is you on program quickly but the the the you hoping would in fairly something more what know So I a able was there that rate was evolving you a

Bruce Tanner

I that’s through least planning, prepared think frankly, for expectations reiterate know awards I’ll we – said we do think in Noah, we sometimes reward we on the we’re how mean So, win have We is while be I’m this but just have how we you we to not going to But every got remarks. the what at satisfying what going way a realistic. go I sure to we many not year. win when

to from a awards into planning face earlier, will of losses may just to losses perspective an indication try And And good orders also we – state obvious tremendous where as far revenue have occur. translate the receive year, recognition may maybe that just the a purposes methodology, we of put than or said say the if first new of maybe kind part the had the year when to our year. – a when of the the have then unexpected obvious in those planned maybe might the more under there. you cushion those award opportunity first half, November you maybe it some think in sales December And or timing occur get I year. in for the I it half board the as an or in higher not is So not into as on awards you will unexpected of we across we’ve so awards what’s first

win some much pretty programs, the first fact across board. half So in we the arena, had of that some sized the fairly good the classified rates in on higher the year but

here. this As a diversified I broad very and of set said is won that opportunities we’ve

than planned of in had is number not a orders that’s the part then we it. part our And So of we sole also got planning. earlier like other but I or received source said competitive we just the orders

of the than data we in be the of that and that as both XXXX. of awarded we’re some I together. or in into budget to than or year. you referencing I were simply here, the at came as in this some translating what the orders. put bulk that we Omnibus we of times beginning $X.X both we like was of to those and I added of expecting the plan expected about So great when that was last by was said or that placed either looked the funding beginning that is potential just been contract talking to And quicker of funding as plan billion under earlier call the form they just at cases all lead And I The in or our all them, UCA sales under probably contract of is way that speak. higher already year me these talked looks that of long we’ve today this expecting is and surprise since happened the in That

answer several So never we starter is years. Omnibus into with envision does earlier translate back funding as of The XXXX. the revenue we’re dollars saying was ever millions this the absolutely of that question yes. potentially associated carry future of hundreds And to on, or

Operator

Shapiro do we question a have Shapiro Research. Please George go And from the line with of ahead.

George Shapiro

of you tell mature us And wondering ultimately I how growth so you’ve program many seen like Yes, if the has? you do in as F-XX? the if more was margins on can get the could future? years much also F-XX And how programs Thanks. then to you still the believe

Bruce Tanner

as well. some take can and Marillyn I’ll to add color that

for increased deliveries as least of delivery out you maximum shows of have mean record XXXX I’ll current So capacity just far records is the of we’ve question time the plan and for through about quite as of actually as this had current we as kind years every that year And than few think look this more plan the of and I you day, I point out to point rate. the planning a far I the the tooling F-XX at tell record. growth. at what goes. other single asked the current

that at go opportunity but assuming rate. question peak was beyond got And the and at volume, And beyond that So answer more we question do had ongoing level. on of of maybe the George, We is sort is I and as we would don’t sort for years. example is customer the the an could for F-XX of has X F-XX were I orders, or XX back international maybe – stay think even F-XX increased peak expect still happen. there what to we’ve current thing I grow peak that there production increases that planned look us an the peak production for sustainment some F-XX the to activity order, how at never more the production domestic on long if potential probably or

on think before the and and include with to So that ways every I production we as retrofit doesn’t go a peak still we quite see modernization aircraft. programs F-XX potential got see F-XX

there not yet. we’re So

in like no where the do approximate is think upside see history get other production previous I item away look and margin look honestly, to domestic but And one for some others at when you would on F-XX our if far C-XXXs Now still it I or on programs that. I And and said or is direct aircraft international aircraft content. I every hope this a probably, day be years George, as as like incidence probably commercial have I said never and that in from when content we’re still F-XX mixed that the timeframe. margin, is see what shouldn’t we still back and there the we if the F-XX as see we sales reason think adding there basis, as they ability from

still that incremental improvement there having is couple the years margin for at that from still We’re probably away next I least said of even but at level the years. think current

Greg Gardner

This is Greg.

back we’ve here, top I’ll some think it thoughts. I come to for final of on up the hour Marillyn so the turn

Marillyn Hewson

year-to-date results Okay, reiterating to and thank outstanding I position corporation and to that we quarter the term Greg. by we strong stockholders. end to performance you, value and just and want produce our our had a continue long customer deliver

to October. us speaking look the in So forward and call call our next we our today earnings you concludes joining for That again on call. thanks on

Operator

gentlemen, conference Thank and using for for your Teleconference that today. service. your ladies AT&T conclude And you and Executive participation does the for

now disconnect. may You

Lockheed Martin (LMT) 24 Jul 182018 Q2 Earnings call transcript