LMT - Earnings call transcript Q3 2019 | Lockheed Martin Corporation

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Lockheed Martin, Third Quarter 2019 Earnings Results Conference Call.

For the conference, all the participant lines will be in a listen-only mode. There will be an opportunity for your questions and instructions will be given at that time. [Operator Instructions].

As a reminder, today’s call is being recorded.

now call the turn to Mr. I’ll Vice Gardner, President of Relations. Investor Greg ahead Please go sir.

Greg Gardner

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

Hewson, on call Executive today and our Financial and Possenriede, Vice Ken President Officer. me Joining Officer are Marillyn and our the Chief President Chief Executive Chairman,

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

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

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

Marillyn Hewson

preliminary key you and Greg. our review joining everyone our morning quarterly and for Good for outlook we quarter thank as results, XXXX us third today our earnings Thanks discuss XXXX. call our on accomplishments

with quarter strategic release illustrates, reflect programs we our wins strong As results today's strategically contributing growth. had of recent operationally. of financially, legacy core These another additional and results; the strength continued

data our long results for investments trending growth the team and focus have and in Ken positioned term future. detail provide in on financial execution program discuss Our for well XXXX. capabilities more preliminary will our

that last highlighting performance. third are quarter by X%. year's Sales XX% Year-to-date XXXX like elements this to First, a strong few results. exceeded our begin quarter over of nearly by we third quarter our I'd drove the

highest from work missile the year. quarter programs, tactical strike of and new have as Control on last PAC-X production weapons, this overall grew development growth deliveries Fire hypersonic and Missiles and

XX growth sales XX sustainment last also we compared saw joint production business and our Aeronautics in this strong increased year's and to development, to the Our area aircrafts deliveries quarter F-XX quarter. fighter third in strike

team III hypersonic Our strategic Persistent GPS program recent a wins and satellite the Infrared continued in in Overhead production OPIR or from their portfolio. contract, new space their wins saw growth

This to now quarter $XXX we $XXX over level the reached backlog, Xth and million consecutive which a added has exceeds our for quarter. billion record

of Our quarter a third comparable segment us over cash XXXX We had billion amounts quarter have the operations improving we in generation quarter, by grew with cash year. cash deliver of from the in operating third from strong operations. results X% year-to-date, over and $X.X billion of cash profit achieving to $X.X at brought $X.X for now keeping on least pace the billion

portfolio metrics a of continue continues provide all and technologies to great are performance services our long in growth team financial to with value that Our products, and in to which stockholders. term by and demand drive customers

of stockholders. commitment Turning deployment key our cash to to quarter, our two during demonstrating actions Board Directors to cash approved the returning

annually, continuing $X.XX First, commitment a dividend. and X% strong our share was the by providing $X.XX increased per to to dividend quarterly shareholders

cash shareholder was our the of taken to share our bringing third actions authority and us dividends billion, our quarter. repurchases. at recent increased Second, through focus repurchase authority to friendly the will on $X.X share stockholders total by by billion end our continue to position The repurchase $X Board returning

helped highlight want term position long business to on moment, I first but for operational Turning that will a just I back the us some strategic areas, follow-on our notable new significant awards of wins growth. few in accomplishment business to and and a touch have

AX low radar U.S. and defense will unmanned with Mission business the was the threats. against Army and systems a provide Sentinel warfare air The and radar line sensors Organization. quarter this Systems selected missile system. Rotary other Sentinel and improved AX flying, integrated variant by and start systems, I’ll current of missiles aerial our to replaces This AX develop cruise

to The to and customers. upgrade develop army’s the with deliver $X sales new award The record initial life international Sentinel Radars, the is System. domestic a potential of AX value XX plan $XXX XXX use from over but to total billion contract, of million and approximately is AXs, AX of

Range building Discrimination strategic our This with corporation Space Fence opportunity, provides pleased the Homeland I’m our new program growth Radar add to in programs, very Defense upon portfolio. and Radar win a the and this to successes Long

over the million Missile the and the Defense contracts Agency. Defense Ballistic of announced two $XXX award improve Missile to U.S. evolve also totaling for RMS System

the CXBMC is battle solution, Our over evolve integrating a new posture XX and further air defense million years, network Ballistic of to layered dating legacy our communications and we excited nation's providing advanced are tracking the range Missile cyber of command, system. System, capabilities cornerstone back or to sensors a enhance into $XXX critical a capability. CXBMC the threats and for program hardening control, discrimination Defense received MDA’s security emerging management the radar award other contract and this missile and long the

and solution Defense Separately fighter RMS receives Agency will test effectiveness new architectures and System. operational awarded and fielded This ballistic support Defense modeling a ensure Missile to of simulation framework equipment possible. the $XXX effective defense conceptual to for the the evaluate Ballistic the help new missile the most contract million the performance Missile contract war

takeoff or the potential approximately value from our sales $X for Poland. and procurement military of billion. department the the state Aeronautics, approval received variant, F-XX teams the The landing total XX notification CTOL a includes In of to proposed with foreign notification of conventional

NATO existing long integrate fourth will Polish that important this F-XX aging the jet proud and XX aircraft this would forward seamlessly and to and deployed of continuing we replace once CTOL deliver allay. relationship fleet Polish legacy government F-XX fighter We're standing Air with the aircrafts. with The generation partnership Forces to look as industry unrivaled our

to for year our over customers Navy sustainment well as parts countries partner spare Aircraft, Corp, provide Marine Air also IDIQ $X.X period. Force U.S. F-XX team a a billion Our was and two and for international for initial other awarded contract as continued support

to with Aero, a state The art, the the received to the award for brings opportunity million following XX we production our the with Republic last aircraft important XX Bahrain backlog year. provide F-XX nation, Jet our Slovak to have security award pleased Slovak and customer Block our Republic the discussed of to we and allies. program to latest notification XX are Keeping formal delivery the as products Fighter these F-XX help and of $XXX

F-XX this remarkable aircraft we of forward years look building pipeline with excited are ahead to see to we the We opportunities and for in come. us the

to In order received KSA THAAD Kingdom or Terminal $X.X High Arabia to Fire Altitude program and brings a to the we Missiles and over Control, billion. Defense announcement interceptor $X.X support Area of THAAD of Saudi the this total billion awarded the provide value

part Space for support our the of a NASA’s Moving $X.X Exploration second the X carry we Deep to vehicles fiscal the planned award bring Space in and Exploration forward NASA’s Program. from is to home will Orion safely area, deliver Orion spacecraft objectives billion business received the Lunar order moon to first three them year spacecraft the Artemis of as astronauts XXXX. to earth Orion that

Artemis the XXXXs. woman the in objective capabilities demonstrate Orion goals the commitment the provide to planned to of next vehicle. the the are the the innovative expressed new by program technologies The XXXX on man and and a mission to delivery moon and explore first land to with has to a is NASA and experiences ultimate launch Mars

and space area DX as identified that a We're the Trident a just the of Martian orbits brave II the third and support the these and XX $X.X to over Orion value we've The for after for has craft system been potential business for a lunar award home the program. been is program the with excited astronauts for submarine-launched ballistic earth. billion close deployed them bring of system, received the leading years. space safely our to million missile over $XXX to one day quarter, award Trident And production on deliver

leading for new investments to programs These with future. providing the innovations growth have new products the enhance made franchise and to technologies, us the continued to announcements long-term opportunity legacy reflect develop we

Turning Act discretionary security constraints quarter spending budgets efficiently Control the Bipartisan eliminating for for spending defense national the and established FY FY XX increased the briefly was imposed levels the XXXX during law Budget entered total of third and an XX XXXX. Budget to by of budget, and Act

supported. advanced legislation resolution government Final to Congress budget Both both is well these on XXXX term chambers had our and be this a short yet funds expire in federal set currently of passed and versions appropriations for November that operating to bills year has are under continuing programs XX. fiscal of the approving is in support increases,

to from Authorization fiscal from the year Defense our an into XXXX but CR. bill portion financial large be can limits The current any until prior Department We of CR this expect the signed were backlog fiscal levels short our outlook of funded impact not to already do previous term law, years. appropriations

of the trending budget beyond November depending CR. our XX, associated extended data constraints we and be some of to experience duration Should resolution the impact continuing its on could level XXXX the

defense that several excited tactical occurred we accommodate significant missiles undertaking which and growth our to the lines performance. business. by corporation past operational Control, expansions in we across demonstrate form our and like two strong of I'd are missile air events during on, highlight Fire the Moving to missile In are quarter, planned

In systems. multiple foot August of launch we interceptors opened missiles, XX,XXX and square production PAC-X THAAD facility in guided support to new a Texas rocket

feet current new us army property Arkansas Production increased production Program. In a broke square accommodate and September ground system and in XX,XXX missile we Fires facility our the in demand Long Fires to on allows Precision other tactical which add to will Range

was area extremely the Northern ceremony location to investing weapons. manufacturing actions quarter, reflect to business as Space facility and commitment technology flagship support new establishing Alabama in well needs of the program, engineering this customers. our the legacy a groundbreaking future corporations for as our as in announcing current emerging of our hypersonic official strike I our work, for attend to These and hypersonic And the three proud

Black set Hawk Air Systems, Sikorsky and search of validating The rescue completed rescue extensive an our executed our to test moving to hours platform contract. C over allow helicopter Rotary perform the In program that the and the it the modifications U.S. Force decision venerable achieve rate team production Mission for expansion successfully importance team combat initial milestone of its envelope will testing phase low of flight, mission. XX to the the into and Sikorsky joint

save of fuel now of a rescue combat anytime, the The system down avionics, defensive has Air that various and revive the capabilities, and capable its deemed improved helicopter around helicopters fighters of to plan production. offensive world. force war U.S. record in currently with capacity, new stages doubled XXX crucial five aircrafts to With nearly is enhanced mission fulfilling been anywhere

turn With that, over the Ken. call I'll

Ken Possenriede

Thanks everyone. and Marillyn morning good

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

Let’s of begin quarter. chart an results overview our for three with and the

Sales our and cash we $XXX.X dividends to backlog We $XXX repurchases, operations share the billion in segment operating million and and through continued quarter share quarter, earning from per our consecutive of cash profit, of deployment and nearly to combination a record a of backlog. Xth generated shareholders to $X.X returning be billion row from of strong. representing cash our in the we grew operations continued cash actions

of strength our we've financial on performance, quarter XXXX. metrics the Based for updated our third

with our performance XXXX be year over preliminary how In this our discussing we’ll is addition, trends. into financial carrying

our compare we four, results. the of segment with quarter profit third last chart year's to year and in sales this operating Turning

XX earlier while As the period, accounting quarter in in accounting third the year, extra quarter, results period. our weeks last without XX year’s year of year. I purposes in weeks this the third comparison had exceeded had last for quarter the week the mentioned Even this

the nearly same increases in compared and $XX.X significant increased both segment last had the the while all quarters, four last to sales levels year's business first to areas continuing X% Sale grew to profits. two contributed $X.X X% quarter billion. year operating over with operating we profit in billion the strength Year-to-date

in share quarter. On chart per the we’ll discuss five our earnings

$X.XX driven XX% our by performance. operational or EPS $X.XX of higher Our year results last was than

a on With provide we one just provided year quarter providing Moving results we ranges estimate to are previous versus for in six, quarters. our revised of left have for chart in the outlook the the XXXX. we point year, entire

operating above forecasted profit above expect We year, guidance to last At approximately the last margin. profit segment we the and of is for the quarter. billion our be XX.X% range last This guidance quarter, billion XX% of mid-point results sales range resulting the mid-point X% our approximately provided $XX.X XXXX in operating puts year. approximately a sales $X.X segment above above

less pension FAS/CAS our $X.X on at Moving unchanged little billion. remains adjustment, than a it

operations pervious the the end expected January. continued driven is and $X.X across of than estimate per in first around lower be our by equal performance businesses. than XXXX Our tax earnings the range from share $X.X Cash billion, our a earlier which high $XX.XX, rate to to above remains has the greater of from or two billion increased at outlook in quarters guidance

of provides this our performance for business to quarter higher a in advised compared earnings volumes $X.XX of as share EPS to the in sales quarter. last expected a an reconciliation Chart outlook seven result is drive profit area. outlook per approximately increase from segment operating Operational our

We approximately XX%. EPS the to derived the mid-point quarter tax discussed these benefits in a income provided represent range rate the expect we EPS $XX.XX coming improvement lower per year. outlook we remaining expected we with intangible to year tax this the the up full from foreign continue changes latest makes most earlier from a share. XX% predominately be that our $X.XX as new rate of Tax of last increase with Together an now that effective city from deduction of the reflect to

outlook Chart sales business eight our for by year. the for area new shows

above Our by a operating we’ve our point outlook outlook the billion. $XX.X for the point area provide estimate similar segment profit new of increase is for year. for to view our chart On of last nine, business guidance sales midpoint

mid-point is prior space’s range latest segment sales, above of their shows profit exceeding guidance RMS our quarter. is high mid-point last their Like and range. them of slightly above outlook the operating the the end from

chart provide look at On XXXX our XX preliminary we a trends.

We $XX for XXXX to current be billion, over XXXX outlook expect sales our approximately X% growth sales. our

growth business operating our in XX.X%. from segment performance We all our new be some dilution and the areas, programs will between start in legacy assumes with expect have programs in continued margin This recently similar level XX.X% we marginal won.

operations greater billion, required cash estimate our from will be our or inclusive We equal for contribution to of pension year. million our that of than $X.X $XXX next

have planned to than in in least year. in plan at expect the offsetting billion level also XXXX, share same have we We issuances more $X share the as to repurchases, any

year; we a its billion. have $X.X maturity XXXX, to similar And next approximately debt coming the

Just our the respect to note, regarding or government may data the take any with other actions does Turkey. not recent impact to trending include XXXX potential sanctions

to evaluate We will continue program. our to any impacts potential

net will of or final This about Moving to our billion previously be phase of higher than XXXX million salary approximately we adjustment FAS/CAS the outlook, freeze planned $X.X we for expect $XXX FAS/CAS pension plans our adjustments XXXX. that our the adjustment the disclosed. reflects

our asset estimate XXX on points assumes year And the to-date the are the the end long term per a XXXX Based performance return full assuming our we X.XX% rates. discount are rate of of we of basis a year. XX% forward X% This for return below or on assets at going assumption our maintaining year.

strong year. our record business this from seen our We've throughout on our summary. all performance chart pleased and backlog I'm areas especially year have with the we And finally XX, of

metrics results legacy across updated full to on and Our financial our continued grow that program, and strategic investments backlog year wins growth portfolio strong the and expect we into continued XXXX have see new anticipates to portfolio. our of our through year based

John. we're your questions. that, ready with And for

Operator

Please with go Thank ahead. line Rich you the of from Research. And Safran [Operator Buckingham Instructions]. first

Rich Safran

Marillyn, are Ken, you? Greg, good morning! How

Marillyn Hewson

morning. Good

Ken Possenriede

morning. Good

Rich Safran

XXXX with either or question a So your parts to Marillyn guide Ken, on it. few a

are growth. to you X% know You guiding

next You just covered that year.

where most I some year? to just are, And wanted the drivers see growth growth you Now, the and possible on the can, What from X% you ask. upside? the see expect segments discuss margins, to to you could you next always best the primary

a for light Your thought that? you next seems where just Thanks. to driving were expectations what's little discuss and year I bit relative guide maybe could

Ken Possenriede

that You areas. don’t question bet, you color thanks I’ll mind you if all Rich. It’s probably go take some give business best I you and can and Rich, across

with Aero. start So I'll

mid-single Aeronautics. digit see year growth to we – see across areas Aero similar that next business the growth, know F-XX mid-single the You we on F-XX digits. growth for

see at Development see F-XX. and than growth faster that that’s sustainment, IFG We we production. strong growing and specifically

are heard to mention starting us, strong the work start [mod] we’ve delivering You Jets we’ve we out order [indiscernible] Slovak got Republic now build we’ll in XXXX there. late [ph] Marillyn got that and behind

Works. also growth see And we strong at Skunk

If the we you we program should double classified about talked grow year. recall, next sales The won. Skunk digit

finally decline And surprise. at for to XXXX. compared XXXX Aeronautics, no AMMM, sales We see in

XX this forecasting are reduction and we C-XXXs If XX a around to year going in XX. year, to you recall XXXX about next deliver

growth. So in digit to you’ll just see decline so for digits summarize mid-single again sales there, Aeronautics, mid-single

be again. and precision will THAAD growth. and at see area At fires PAC-X. We weapons Missiles strong low that strong in specifically see Fire Defense strike Control, growth Air it Missile also would integrated mid-digit fastest business we JASSM and our and see growing We growth in and

At RMS starting than the we VH-XX business. some finally in more see helicopters IWSS Sikorsky. that of that rescue programs. search the Think and at growth. offset. of growth as We're presidential That digit piece declines low and MH-XX to single combat Combat of see domestic see Littoral as Think strong Aegis. our and Ship We will

our we continuing going recall future. the see growth last we to growth, And are space at seen if this and the share to in space. year year of space and we that were have at was lion see in And at strong time would which the [indiscernible] order we not talked see up-side that book about you we

some of and that programs The Advanced that so [ph]. are transportation think wind of our declines slightly Orion that and of and historical [ph]. [indiscernible] space programs and in upsides down starting business, OPIR [DHS] hypersonics like growing is are to the is segment think [OPIR] and of offsetting

the for X% So net, we roughly see corporation. growth

margins having margins, did profits as think in they see so we digit. similar as of will Aeronautics the Going to same rate as grow at that XXXX. mid-single F-XX sales, profit

is production with than and therefore dilutive in faster mentioned I growing sustainment development As sales, nature.

mentioned I Skunk’s. the

So Their digits dilutive profit, Skunk’s also in absolute see is growing. is you'll basically nature, mid-single growing, will profit at that be the their but dollars so Aeronautics.

and Fire Missiles development saw they dilutive classified talked XXXX. will Missiles other will lower margin. we won in continue we've see Fire overall about XXXX have that we to and the see Control in we risk Control, XXXX, that XXXX we’ll in as that in less so margins than retirement as and ramping-up right and program grow programs now have than we

RMS – XXXX. are That’s XXXX similar in and piece higher business our of by seeing slightly we to Sikorsky training compared or to our margins the business. driven

retirements And see risk in and finally new we XXXX program at XXXX and in also as Missiles in similar see like also we did XXXX. Control And less are Space, on earnings we forecasted ULA, Fire the starts.

had So you in see also Fire than XXXX margins overall Hopefully, space color have like that XXXX. we lower will Rich. we and Missiles Control in gave enough

Operator

with Myles Please go we’ll Next to UBS. ahead. go Walton

Myles Walton

other that clarify or sourced was if us resourcing network in risk risk you are Turkey done but Lockheed means be guidance, as Great, what's it context work agent talk for is well? managing is agent Good for you from instead Turkey. the the F-XX carrying of hoping you or Lord there's thanks. any morning! about that any that excluded in think to the is that might being reassigning you actually transition you've Ellen that outside of the being and if Marillyn players. Lockheed the I just Can of mentioned for could week this Obviously, around are that the I

Marillyn Hewson

beyond all might the F-XX, questions time of to the Ken Myles on about be some This because think Thanks and you balance had just to in the we’ve question Turkey portfolio, ask maybe probably good cover I’ll up. weigh from a for others it. answer broader I the

Turkey as of of suppliers, the you July back announced of Department the But Defense XXXX. date March from F-XX and know, the target in program in-country the included the of exclusion that with

of several providing terms throughout in supply the supply parts, sources quite that to some for take to to of working been place government contributions United evaluate quickly with all closely we and be in U.S. able time the current chain. establishing the States months the of So on the for continue program and is to our Turkey components etcetera, we’ve alternate that

of we're the course question, are responsibility Pratt own – We have know yes. work, as of are some have We that and have Pratt we prime Whitney that. do we for that do, contractors or with, that’s their I oversee. if as has you those we work contractor those working which Whitney responsibility? doing in & don't for you major country supply, we the & if I’ve mean sources understood

a have covers So in decision are we for take government and that work we agents U.S. all are are that this risk the it, we program contract terms at the modification the some purpose, by same so have of to from the Because the we've the But ones and been on with the associated the for we risk. reassigning the out government time. is working from of even contract work, Turkey that U.S. coverage though it that the reassigning point. a

Ken, also color to at this have might be of it some the I give helpful work that rest on point. Turkey of in the kind we think

Ken Possenriede

bet. morning You Good Myles.

related had XXXX to we about in talking know Turkey. our earnings no our impact you to the disclaimer know release You

color take Let and I’ll four me some you about just give areas.

I this so and exports to So for government. one so and contract of you our the to one Turkey partner through of And know know this delivery and is is by of agreement, aircraft is, you think so that's the one here. U.S. far the largest Turkey a first the related item are the F-XX it F-XX its with partner is program F-XX is countries the they

documented impact built Turkey. has currently for building planes Martin that we’ve are government will - not or Lockheed from any absorb have We the U.S.

through you that our on here, with So I’m no collect saw government for Turkey that. really assets. some growth to the to bill work, areas our not this and the sheet for them U.S. from to covered in of Part we balance believe we there. other mark so sure still is there's from we're working Other get so contract growth and material, we really contract are are business us impact because exports can a

have impact government that sanctions, more you backlog Think know we $XXX a potentially in is few that’s million for a one second we be would on sanctions of currently have nature it net-net which continuing XXXX, not military but U.S. to The would have see billion, or the get even adjustment. and Turkish park, – the element our by financial impacted an could to due of be advances, this a of in programs is these determine material them sales, ball we that imposition to item military work have Turkish would and know returns, a any real the impact; it reviewing keeping you to back to that's but material as know a advance book about inability do any advance, we $X cash, that and we payment at that’s cash perform us. don't cash profits our stage, to a programs not any

and The is in Aviation. Turkey of have in as have and joint finished production, third the F-XX $XX mechanical precision Group; equity that venture for company joint about parts called Alp the we venture million. and and scope Think Hawk that assemblies area and it’s this the with Alpata Black as stake a of Alp we think manufacturers an have a

so year, We also recognize a amount. $XX not large and are really equity a earnings million than they less

Whitney selling parts for This implemented, be the continue National at that. should from & parts know through however Alp if reciprocal to sell working Alp for Ministry of to Defense, Pratt be is working F-XX; we’re we're support able sanctions prohibited this component to to you this. that. So through They component time are won't be unless components, would

right either. we there now material a impact So think be to don't

And F-XX. then the suppliers Turkish more last actually U.S. one that and just supporting that's than is programs the are

we're that are So source are the the of independent activities sanctions and to they they'd Lockheed But official time second way transactions of still those down authorized. working and sanctions written, XXXX supply are conduct for know in and contract wind mentioned business the underway period. Martin, as of you the we UST be still by the Marillyn working the

government alternate the as supply impact hard the minimize And closely F-XX the U.S. been working sources establish the been with partnering Marillyn our on and of program. U.S. We've mentioned, supply chain in to we've to

contributions working The any to all second based continue possible quickly the with program current accommodate as government choices for first potential the understand we’ll U.S. – will Turkey's impacts. and to to U.S. be

Lastly, and you lifted, to know Countering Turkey’s of due time the for at potential if the or point. related speculating even Through we’re at we’d the system, CAATSA, are legislation current at congressional America's of this Act impacts Sanctions is sanctions implication this Adversaries the the that’s which to mindful S-XXX but purchase any

question. So answer the hopefully that helped to

Operator

go Sheila go with we’ll Next to Kahyaoglu please Jefferies; ahead.

Sheila Kahyaoglu

Good very morning Marillyn and Ken! Thank you much.

Ken Possenriede

Good morning.

Sheila Kahyaoglu

working expansion about model on of contribution. the and flow just pieces target to term off-set so. and cash Ken, free you flow and given capital. cash XXXX In think we the step-up How drivers ‘XX bought the past moving cash do with you've talked pension about build a asking year in flow and I’m operating a in a three longer CapEx

Ken Possenriede

Sheila. thanks Okay,

said XXXX, of see everybody, inclusive you $XXX XXXX now – million $XXX billion so based know that’s teased remind and you our on up about ago I’ll year we know us back, we with contribution. saw long range what Bruce you think $X a [ph] about he $X.X if know billion million. I up the plan, and did You billion on as right about go $X he what in pension

about in million is $XXX contribution returns due the XXXX. pension we to The had up

year. ago, know months So job we've a a this six mentioned nice months working done of priority I ours seven our ago capital way that working and you through that’s

and out you right pensions. much but assumptions it be XXXX in is we about our billion. You will know XXXX billion be know and $X the Not best would for looks right billion be contribution XXXX how north we could based on now of see north in of sure XXXX, pension year $X now and of north this $X like the $X we’ve we’ll billion, made

done you and of a nice grow know our couple job the when we've January. that think So again, and we continuing over give we'll in next refine cash you months I to of guidance

Operator

Poponak Next we’ll Noah Goldman go go ahead. to Sachs. with Please

Noah Poponak

everyone. good morning Hey,

Ken Possenriede

Good morning.

Noah Poponak

to five was So in the of that the XXXX in revenue outlook, back you just a lot outlay grew negative. to or coming growth know revenue a it's company past; seven years

rate, You growth you where this X% growth when you a were of were still XXXX projecting know had type declining. outlays type XXXX,

you the got bookings XXXX, up Book-to-bill good XX basically XXXX to backlog trailing now ratchet it's something X.X. at growth as is the recent the when to did started in company, know you've You been closer ever month trailing book-to-bill and the history and month XX, really as XX

you prepared the unless backlog to the extensive programs match handful pretty that of is were XXXX just longer already a backlog gave completely I'm change in if it there's than of out backlog, wins ever P&L come list So that recently with specific the a new remarks. of out this or dated projection. up just mightily revenue this a in growth struggling of

Ken Possenriede

its Ken. Noah, Well

this try I relieve struggling your I think best take the to I'll can. and I'll

get believe fourth one receive biggest very continue be… based into being we it's the So we’ll We we're talked the size Probably we're by year. about on that you to know in block orders the backlog. definite we grow once so this quarter, to the into we back log going see close, going and to

Noah Poponak

the So fourth going quarter? grow to it again is in

Ken Possenriede

think XXXX the and that look billion. $XX about we was, over $XX the increase we’ll billion, $XXX – AWE. about plan as were that at billion you what think of advance to Think had $XXX so billion pull-in’s the into as of up about $X.X this of XXXX; our be Yeah, of that from year billion

rather quarters time. of of We overall the worth period three by, to longer. that the which got in be three is $XX or year is C-XXX. billion the multi-year longer year piece That'll one, block is quarter than years’ over this going Think to so That of over a fourth three period. give for a get the We're take.

did the is plan we If just back Those I go about billion, to $XX are upsides pure billion. that the remainder not $X.X for.

of it back Think if seen. that now, by have the period of from came $XXX $X.X have we we and call a guidance $X.X the period orders of in historically increased our from that billion your So to the than billion, to guided comment, could had upside of I is that, start the billion. we billion longer the $X.X year gestation

Operator

from Jon ahead. Citi; next Raviv is with go please Our question

Jon Raviv

Hey, and good morning. thanks everyone

Ken Possenriede

Hi Jon.

Jon Raviv

a in what provider, but integrator the kind term of your this is your in I terms get industrial what's that in little means platform some – on technology of what shifts platform you. industry. and line enabler. your broad is of you structure, terms – always of there's on who a XX Marillyn, growth, the that, sense sight and point. do we perspectives position kind question beyond say that is the here, dynamic a that know at long you when that a that your Thank or you have of for what Any is perspective bit know

Marillyn Hewson

transitioned We today, call, component our mean question strong Sikorsky, used program. I portfolio. GS, platform for would the was time Jon. a years, years, we I At of services we in & the we look as toward few IS have based that are divested last a very where the the platform know provider. which that element, portfolio several more over at you Thanks we you a I guess as brought

our to those some at tactical argue go of lot a addition you You course missiles sometimes are from those you our it just could on of that even to if standpoint platforms. know even sensors, extent in but that components though that, platforms, we the that got look

when at be got into hope you is look for at aircraft. forward rescue the – the going of we us that, the the Sikorsky, F-XX production presidential of next the hypersonics course for from that our for But payment downstream to even and combat ramping in five will CH-XXK, growth forward. growth going platforms programs When of that'll company, addition up XX we're are production know for that all element ramp to up. from production major you years. to looking We've helicopter helicopter, to be the We a look the the

we we had expect that production got developmental a more wins know moving we’ve there. of to You lot into and be

able you lift the Vertical that When Lift as we're look and Future area. you from for resurgence, Future heard our Lift on another C-XXXJ multiyear platform of in we know exploration again for you last were the light three F-XX the Vertical which based, or helicopters handshake to is arena. important competing get Space another on the Orion, our month agreement is so; platform of at medium a Ken, in

our we overall; of So systems frames are just more growth that where than is pretty and and weapon sensors systems, are those elements and do you important. etcetera the part of that that's us, know with certainly to that platforms our the on

area for well Systems the of at that them. know growth. When come autonomy that doing PAC-X, you AI side, and of just us in as see all software and and the with so defense argue that’s missile you what you as know Aegis of THAAD, know on just all we’re on elements look They arenas, you I we would development those the growth

I want It’s Sentinel So the those to we just have. us I a had go company that a was radars for don't big several as to win that AX on are radar. important along and win – I a again. just great – other put I we with stomp mean

hopefully So question your Jon. that answers

Operator

to Next go ahead. Strauss please go with we’ll Barclays; David

open. is David Strauss, your line

possibly? If you’re on mute

David Strauss

Hi, can you hear me?

Ken Possenriede

Hi yes. can, David! We

David Strauss

Okay, question. great, great, for thanks the taking thanks for

like So close big the fourth to ‘XX for to down on X% It you somewhat of the Can you quarter. step guidance high touch ask it segments. margin you looks pretty since I kind your year for the wanted full know XX% for implies a to about that? in

also, working you burn to about in ‘XX seems again not working and fairly can can little as bit also ’XX, capital know there’s then much your build of about we capital? but I a Thanks. cash capital talk in ‘XX you The – think tell, improvement best a ’XX. flow working a And imply in also capital big it you working outlook, the operating on know

Ken Possenriede

Okay bet! take David, You I'll Ken, that. its

fourth on around for margins. the the business go I’ll quarter So areas

we’re the in we’ve year, is the similar that seeing aeronautics, I so of line margins rest think that at So with basically of had year. for the aeronautics the rest

products, Missiles risk retirement fourth in the in where production Control, cycle the quarter down, and planned step-ups it the compare this we quarter quarter, the the is to we’re about us the more third recall it do on step-ups and you second you in those fourth year risk timing year. to had right, than sense and and to we for later those of in have that And were and the going we Fire standpoint, made last year. a in year talked based retirements first had earlier your of the from what we than in if if

Fire cycle the So you it’s missiles on just basically and Control. production timing of know

RMS much is will They tremendous this the missiles year. in then previous not the retirements sales out are similar quarter risk and program. and and that's aeronautics. in a growth, like And be that years. it’s replicate ULA to lower earlier I’ll having we're earnings absolute in year had done similar we've enormous year so to fourth. lastly an Control They what year. compared in pretty Fire just line growth, fourth the going last EHF with plug Advanced profit and in similar Space, with to our Its to give Also

I on then I you cash, know David. view And a different have so think

see significantly working of working in the capital million will we third to half in capital most with in in site by the first X% of growing inventory. are to by quarter. XXXX $XX in and year of reduce working quarter fourth about the We for that and a and build-up contract assets now and going be $XXX we're the line We right capital grew had growth, million only only

of data $X.X focus we when trend Sheila see years, line and and the we last to are on our asked for the So a in here continue capital, year. too why to to from that’s question on we billion than site seeing what as we doing cash we improvements what working and relative $X of basis, forecasted the we XXXX better out disclosed XXXX billion

Operator

to ahead. with Company; go Rumohr Cai & we’ll Cowen Next von go please

Cai von Rumohr

very you much. thank Yes,

give into So terms that the your then you’ve and be sales year today lot growth in and of what some next rate growth you some mentioned growth us sales Works. issue, for you hypersonics; expected kind in had tied of this Can would of higher is the next numbers us of wins good a year. whole has little Skunk work bit number percentage and of felt a classified terms of

next an much. you in Thanks If where were sales opportunity would be? going to year have so it

Ken Possenriede

you know at But us, classified. you at seeing I upon You because bet Cai. say described what just know and is would corporation on I because do Missiles spiking Yeah, classified unfortunately program and the one our what of what than based can have. say growing the earlier, we're our is I customer they the Control, are frowns Skunk’s Fire the opportunities and that of of we and that faster

opportunity and I'd say I on gave the color hypertonic last I of sales. other terms the again think in call

hypersonic the round everybody's what million. part see to for next So numbers, our these program for most is today, around year of we benefit, of best we in sales for hypertonic But record. are ability this $XXX it's today see Best just not $X what see we year billion. of about

know phase in you still made investments we Marillyn the is that in starting It and we've we’ll launches hypersonics. in program into because are haven't it any strike’s first next prototype yet counter and year the hypertonics, which out XXXX. mentioned, been doing As possible start counter on hypersonics really of

There opportunities in is may well. some counter likelihood hypertonics some see we there as

it in be hypertonics. could could it So classified be counter in and

Marillyn Hewson

we and C-XXX, helicopter F-XX, and as growth would and ramp well CH-XXK the was still PAC-X continues and our you when and XXX the mean earlier our as at look you Those as this know to we hypertonics program missile them up at Sikorsky that then over mentioned and F-XX. I the THAAD. planning the so CRH areas look I as combat in to to just growth add, to be XXX was and grow going area key are big to rescue growth, are It’s deliver growth. defense year continue

got a solid growth of we So programs. lot

are seeing I over we XX is about good last history think you know as as look really strong the that the you go growth the we over I our into years, know feel I XXXX. growth X% corporation of

Operator

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

Peter Arment

we for you. at here. at forecasting Good I and does production, this Ken. around cycle long-term sustainment But the the we're Ken, apply I highlighting We're know, deliveries with is this kind you or you're margins, look here and work that's about Yeah! look Skunks thinking last know guess really is when back testing I morning F-XX your Aeronautical ramping. same the guess and if segment Marillyn question the the some given growth of of peak F-XX changing just with when you now

kind of Just margin the Thanks. the forecasting? you profiles we that how about maybe, in in evolve profile a think of improvements just

Ken Possenriede

bet. You

X margins just Peter, saw as sustainment thanks which I'll but Yeah, Again, that mentioned, unsolicited summarized got Aeronautics you we've and PBL. the it for start than press, will say we're the at for proposal you year with similar XXXX. year. seeing So we question. next this year annual I'd of probably a and the an the seen grow, on buys, table part to for continue most a we in put proposal, the

So think as that of performance-based logistics.

there not There be That so would margins, that on interest working so sustainment dilutive we're would rewards. give more and putting that invest, industry, of for through opportunity that the an with think us should as we're is industry be risk to some metrics now, commit additional socializing now. industry would the that in and government; and to

in some as So there production. margins starts in once getting into help multiple some to customers expansion starts be these classified margin and I Aeronautics There rest would of Aeronautics with it the the be be the that opportunity improvement would also there. going think could that Skunk’s similar margin on program should

through we they're that. there hopefully is going we F-XX have customer. on they're expansion the I've and and deals deals, the two, the balanced as housekeeping the definitized that getting we're if we as for on with reasonable, think with opportunity buy now Block perform, mentioned we're performing fair and production week next there earlier and start We well. some or good And on the margin we'll in And feel

Operator

Research; with Melius ahead. go Next we'll [lease Carter to Copeland go

Carter Copeland

Hey, thanks time. the for

you program was you couple, something that interest before here same a release Ken, quick was just guys the to MFC, that related have the in One, on on called new? of ones charge Just disclosed time. or the in the program out

do And what potentially what aircraft what secondly here you beyond know standpoint rate see other you pipeline, and going or you've from on volume then guess production – XX standpoint, customers? a talked aggregate and I F-XX the to the about Thanks.

Ken Possenriede

and hit then one will Carter. because answer. a that do a I'll the first the I'll second probably charge, long-winded Thanks less of be

we mentioned, know now So backlog XX Marillyn right have you F-XX, as in aircraft.

First year one won aircraft, be gets working that XXXX. of eight of same we're had in the month. to the day that. the delivered, We like process they Right gets seen in once roughly of through of press, last Bahrain one the delivered. probably hopeful Bulgaria. behind looks by country I – see so in you've we're production – Bulgaria build it

countries a out plan XX if other grow countries that Morocco ramping and start you up that, to aircraft, and through backlog in month. by our could our the another we production like Far East aggregate in In that see will think three that line

one with that have East the now out Far we'll said, four a like capacity XX, we built to that be see countries aircraft start would all I about and is There have. build is other be many think East. those that Greenville right interest there, want as There we in in the frankly in could to Middle where and and but month, discussion and would another country the problem goes, good a we'll as month

will there as are keep and opportunity we there to those to other that The in which work F-XX. will $XX to a modify we're is enough card current F-XX. elect billion, if fortunate customers program that see great Indian announced propose, out there. would is, variant airplane that be the program, their out but billion so so we're for going future mod is aircraft, to going India to worth We're our There other great build wild that win $XX well, that aircraft that we've

a performance won't Control, think with modest actually sheet we program at we charge different charge and what think it from Regarding It we the talking took, the actually had. balance Fire we anymore. that and is a was we charge took Missiles standpoint a than is and program be we about – reserves it

Operator

Our is go with please next DeNardi Stifel; Joe from question ahead.

Joe DeNardi

or I Ken, talk looks there. for good maybe think thanks, you pipeline it has Maybe Yeah, the a positive there? guys what the been Can about like prices seems positively you F-XX afternoon. come demand late international surprise as pleased down just Marillyn of had or

production in Thank are And there more the it discussion peak with XXX to I little think then just taking what XXX, point a the be? some what of would DoD about at were one conversations color to you. terms there.

Ken Possenriede

that take Sure, I'll Joe.

So where happy are program very is F-XX going yeah, the with we internationally.

aircraft the announced You in a XXX the Singapore saw that's additional modest has an a aircraft. It an Japan aircraft, interest start. committed be buying for amount to they top announced will originally to. but of start, great on

And who XX Belgium the It's Japan for with will aircraft. actually said Bs. they buy some want to We're [ph]. buy Singapore we for Bs award pleased likely some got

those and are help now you're a shape in Finland competition aircraft lot $XX with exactly than certainly to It's will right opportunities. continue earlier thought. million for we and got those We XX to which the in we Switzerland, will

that. we're shape We We think strong pipeline of heard competition a buy out the there so the don't about to in which we aircraft, German continuing with to is wants the Poland up We're could competition buy good to aircraft. F-XX. Poland. for that. think XXX Canada, out We're feeling we're so yet, there about XX still

right. capacity, Regarding it, got you

checkout out Worth, in So aircraft. right one and XXX final build at FACO Italy now to that in Fort XXX, assembly in as at and the Fort the capacity continue the Japan, be about the if you look one to see we Worth we

ways got we to go. So

Greg Gardner

this John, Hey Greg. is

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

Marillyn Hewson

let operational by financial a products of and that XXXX successful we well really and for a execution backlog, we're restating Thanks We believe services. demand closure we strong and of completed for continued and XXXX. positioned with performance, Greg. and program another me have strong end in we growth a of heard our Well, as just quarter record you are on focused portfolio

So at next today. we you with appreciate on earnings John, joining all you us look call call forward call today our to concludes speaking the January. in our and we that

Operator

you ladies may and And disconnect. you. Thank gentlemen, now

Lockheed Martin (LMT) 22 Oct 192019 Q3 Earnings call transcript