LMT - Earnings call transcript Q2 2021 | Lockheed Martin Corporation

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Operator

Good day, and welcome, everyone, to the Lockheed Martin Second Quarter 2021 Earnings Results Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Greg Gardner, Vice President of Investor Relations. Please go ahead, sir.

Greg Gardner

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

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

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

James Taiclet

elaborate few Good a on comments everyone, joining this on begin in will Greg. financial XXXX few on you earnings I a with us thank our our which for Thanks, morning, and today call. quarter minutes. remarks will Ken second right morning results, my

exceeded Our Space levels our second quarter led team. year's second as each quarter increased XXXX business area last sales X% over by

activity. increased provided will Establishment Atomic Generation Overhead of Ministry to due this to that satellite Next the grew management close Weapons Persistent activities, hypersonics, business U.K OPIR Space Our XX% our of which in quarter over Infrared out program, support or an Defense's growth

profit in classified impacted area. charge segment with Aeronautics a Our one-time our by this program associated quarter was business operating a

our in significant delivering committed precludes say depth, developing While their that is from we're to and the for capabilities matter that capabilities this of potential we’re program discussing that company. long-term we the to customers the classified these highly nature can on us that the solution this of attracted behalf this

Our generation $X.X accelerated by chain. our payments mitigate we on quarter continue of operations supply $X.X this supply remains billion cash strong, the making risks of billion base from our to after COVID-XX cash as driving to for brought

ability in repurchases generation remain billion. strong our technologies in to balance $X generation actions, strength customers sheet our and us to We cash Our agreement share confident with $XXX a accelerated thereby cash quarter, returning supporting enhanced ASR capabilities our quarter, the key provide shareholders. $X.X including our last addition this and of deployment to year-to-date ability executed the cash investing million gave to bringing cash in to and the complete repurchase to billion continue balanced driving

their Turning to enacted XXXX for year $XXX $XX to billion an from 'XX budgets, the White proposal the House budget. Department budget fiscal Defense, requesting submitted FY increase of the billion Congress

initiatives is support for Lockheed and billion supported, include Defense PAC-X THAAD, this agency's Missile The vision as on and be investments capabilities well F-XX enablers. as programs. focused the and Transport These innovation $X.X to over modernization the well space our in capability satellites aligned invest III Defense strength billion recognition domain hypersonics continued Our helicopters including Department with OPIR, believe faces. strong $X to including portfolio Great vision. C-XXX, space programs budget Warfare of and for to-date in for continue for over advanced now CH-XXK, President's billion program, signature GPS and of prioritizes programs such our Century to in our recent the XXst for also the and the development request next-generation FY and request, well areas $XX fully Martin approximately technologies We Architecture. to Layer interceptor need innovation for of broad and budget deterrence support UH-XX request Sikorsky of and portfolio, budget all programs, of F-XX, Air the Power March Congressional the approved Competition nation defense award; systems. we 'XX funding address the our within In hill many our from requests include continue for and our programs, The other and for which see increases of

advanced Turning Command XX, this company's Edge participation Signature space, all the and to domain as in enhancing from in. I'd the we joint National and This U.S that our same Air at adapt services to this demonstrated integration geographic provide U.S. military near flight with operate Edge capability, all begin highlighting which management generated of space-based capability a the infrared for a sensor defense the missile four integrated battle Legion Alaska as a and Guard's areas fire demonstrated and All successfully Also We in situational Diego defensive San exercise narrowband operational Pacific joint and demonstrated of technology enabling MSE during joint across constellation, for fires across by achievements real deterrence communication for a in strategic data link programs tracking JADCX. between concepts the of our links Center our as the was Pod using in control prosecution multiple demonstration and support exercise threats. area, Domain various sea, targeting targeting capabilities JADCX newest integrating live as example. satellite successful they Among integrates an command very broader supporting F-XX Northern some time integrated communications the our new of also real -- Aegis against initiative. business Indo-Pacific The interoperability data the domains to land, also and the air time, goal track search that facilitating known during network. event. And awareness offensive during the exercise and connectivity participated and a using and satellite our of ability such by air Northern exercise Operations PAC-X in to control; wide well enhanced our into quarter, with time. in like sensors one, and demonstrations the to services included

our the the under existing of goals first demonstrate concept. as Martin our using effects Lockheed platforms was XXst customers actually century in One of my CEO of year benefits to network warfare to

just Our in performance did started. integrated getting exactly that and we're Northern Edge

XXX. and team welcome into over heavy the the the that F-XX reduced systems, Council join the Lot Rotary will contract aircraft Sikorsky The outstanding to F-XXA In of conventional offering unit them area Stallion provide Including over Switzerland CTOL F-XX, the to aircrafts. continuing orders win value Switzerland's XX and would was and information with F-XX U.S our for drive X a along the takeoff additional cost nearly Lockheed customer. comprehensively value Aeronautics, business of $XXX of to program services previous and F-XX survivability, combined. Lot specific when down represent In the we also this of which procurement Mission nation awarded record XX landing, become community. with are included is and modernization or program Lot X was billion Federal The billion approximately for Lot total the significant award XXth for network helicopters King million part and initial its years. X, award $XX lowest some those both an for The also systems. to Eurofighter those competing for $X.X in selected AirXXXX since for to the across Moving excited Navy costs we're a highlights. our nine program. decision $X.X and its order a Navy and option out aircraft, billion XX production which lift all This operational their to a X, of Martin Rafale value inception, because over and K's training X noted prices delivered Swiss XX received for Council sustainment superiority a we're and nine CH-XXK announced exercised, and purchase the as the worth of

CX The to team and critical participated XXXX Air CXISR from and services. Control throughout still missions, TBMCS Management in is of into front first or Run record XX% All interest unique customers execution go RMS, over a System many control quantities battle in command Battle declared of operations of other the international interfacing the TBMSC air Operations us, and way legacy with a -- with and U.S from our Suite. domestic the new Force's to performs Also The in Domain capabilities TBMCS long the integrate aircraft driving product, system Force So Theater intelligence was planning of our collaboration and additional opportunities. armed in Kessel Air management systems

Our RMS into to commanders and delivered capabilities joint TBMCS operation campaigns. delivery Kessel cloud-based team and data enhance of a the pilots architecture in migrate and executing suite support plan Run air

Missile MSE work XX XXst threats. missiles. our Sweden, and Enhancement first one Air another this Fire case. to Defense defense Missiles Air Segment Sweden So international with air country advanced delivered century incoming fair Control, capabilities In concept and example the providing of PAC-X with our to against action our Force interceptors to integrated of in most becomes Missile choose and world's line business customers or a of PAC-X the MSE defend now customer

area new satellites security space of Space critical launched objectives. our successfully business addition, national two support In in

situational Lockheed military Geosynchronous Martin Earth modular latest modernized with satellite vehicle our lastly, is forces space selected And VERITAS missile elements the programs U.S and satellite key investment. investigate design, warning Alliance research better launched Venus. first Launch NASA's X These that transaction including from surveillance and the GPS capabilities. internal to with operational of centric United also exploration Martin's return when legacy a build the and two civil to Combat missions to or SBIRS the and I'll The for LM across build rocket both today XXst allies. GPS of team Based Our the of and NASA century the that and of Global concept. customers deployed the Aerojet domain GEO-X equipped quick Infrared built announced to Magellan planet's Venus, in XXst and atmosphere. OPIR using space three support times now meet satellite of the or more an security its decades. the anti-jamming support on Lockheed on company business will defending sensors propulsion. objectives. spacecraft Rocketdyne GPS our a vehicle from with satellite the over first technical Venus the innovative is represent III strategic accuracy operate successfully are subsurface build Space U.S that improved defense, System constellation III significant a acquisition the strength to missions area is separate operations solutions, satellite will we this That's and we intelligence the fifth network GPS fifth more future remarks space GEO-X missile SBIRS was Atlas enhance and gathering as System signature for join and SBIRS XXXX on national focus was constellations believe advancements and Also to Positioning The well previous Vehicles, the Lockheed my surface awareness constellation Martin our three These Martin's satellite the developed December, III our resilient, originally powerful Bus. Space in from The close warfare ballistic on represent to it Vehicle DAVINCI+ bolster with for GPS as portfolio that and their gives to the are orbiter than its highlight successfully objectives broad is satellite and quarter. GEO-X to us planet our early and force. missions program Space space space achievements Lockheed and and X providing by the to the ability Orbit status comes all will guardians the communicating our and orbiting our expand industry's last all its

quality increasing the in We the process to for we in Trade remain process Federal industry. to of second the and Aerojet enhancing of year, DoD committed responding priorities we'd earlier to achieving request received reducing leading of which We that information, a of in the Commission's expected. key speed step review as cost, a merchant in position products, Rocketdyne's the to are addition supplier all new the

We turn pending as -- their year. transaction the quarter we regularly hope continue Department close of and expect I'll the that, to in with fourth over to engage the approval, it FTC and of to to Defense and this stakeholders review, With of Ken. part

Ken Possenriede

Jim, you, everyone. and thank Hey, morning, good

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

and X, was quarter operations per Chart $XXX for the quarter. to solid sales profit with of quarter. second total begin and due comparable program, overview an growth billion the our Let's year's exceeding expectations last for the of aeronautics while We in operating share. cash Segment a classified to earnings our million impact saw $X.X from was results

contract, paid. our cash single the and XXX% outlook were of the increase consecutive $XXX hold share full for other for exceeded key For second we per flow $XXX in of Despite we to dividends shareholders metrics. our million earnings of repurchases outlook all to of addition to financial free issue as another return year a executed quarter, able cash million share

ourselves X, with operating this Turning last to Chart we segment and profit results. compare year year's

the Second last profit at remains compared quarter of sales per to X Chart approximately our comparable results. grew $X.X of share quarter year's XXXX continuing with for our growth expected shows $XX segment the billion, XXXX. while business, earnings to operating billion X% second

this per Subtracting billion million as volume, to excuse higher to above second our and driven free approximately from reduced we're will year $X.X expenditures able $XXX well $X.XX me, By was of the repurchases $XXX X, flow to generation quarter of of executing $X.XX able as cash generate from our On capital dividend additional of flow for last in was stockholders cash per Our earnings results share $X.XX our by our operations, and at distributions free cash Chart million. cash second -- return we look our FAS/CAS share count quarter. share the providing were our we income. XXX% quarter. of share,

X. Chart to on Moving

noted, our operations. from for cash segment our outlook share we per As holding operating and we earnings and sales are outlook for increasing profit

keeping at cost repurchases. and for the to offset investments Looking non-operational RMS share To conclude takeout us earnings volume our we increased from Aeronautics, million have opportunities driven are that's continued continued downward cost Chart per guidance primarily along at aeronautics, saw continue impact Space, $XXX year, as our offset Chart to we Missiles pursue share the our at in at increasing $XX margin Sikorsky as take improvements corporation the the per increase Chart and our X, a our the sales and on we for adjustment for and by million. performance space well area outlook combined we And and impact also other also and summary. consistent with of guidance segment Aeronautics, we by items, at will and the XX, guidance. our XXXX show Fire the closer prior share. sales at operating profit to look In range improvement hold and update across to the total our realized for with earnings Chart allowed our RMS, a X, benefit we Control On which takeout offsetting XX, Program business

all key to to as noted, full to earnings We still continue the outlook see our other are that, chain we're we second national for accelerating half of sales as as cash cash we begin supply per with look John, And growth security. and to share our holding as operational to vital the to ahead XXXX. Q&A. increased our metrics commitments year-over-year ready And, while meet performance, strong have well

Operator

the Harned go Please line ahead. with first Bernstein. with of And Instructions] Doug [Operator

Douglas Harned

Thank you. Good morning.

James Taiclet

morning. Good

Douglas Harned

some could that at you Martin. things drive likely growth describe if the of see to wanted would I Lockheed Jim,

the fairly Martin's has as You talked during Lockheed about backlog XX grown last have in moved revenues flattened. now legacy not but some programs higher, have we're months, a budget budget, flat the some naturally really environment and but the

look this But growth when could what can backlogs mature drive believe recent like areas years, line single-digit, and in hypersonics you that to I enough next in offset look flat some mid growth potential the backlogs. programs? higher we good say environment, take get you the given should at do growth declines for highlighted Space. You X basically you mean particularly and top

James Taiclet

morning, Good Doug.

it's of can And question Power Russia, address overall industry. resurgence mean position and the point. and critical And breadth and China cutting change. defense needed to of of to an and technology its and think that when is I very now, with Competition that a platforms Great defense Lockheed period enterprise and With inflection enterprise, I I in during that important its edge is I both the the military and in It needs we Martin say from where your drive with is change, government, systems benefit change. started

up have so, we're mid with over years, leaders, do leadership And And benefit we're And shareholders ways. partners the one X a years, go our strive our next by whole technology and etcetera, effect the is number over getting this. sensors here. including to to And a couple defense going We're our systems. we've can value roadmap And to programs, of is to the take telecom from you so that network value our and be going obvious next the to growth. the across future single-digit our in defense and deliver started. and convinced enthusiastic much adding sectors, for our system existing the domains, that going to yes, which comm capability going valuable, up working a more across can of energized implementing sector the I'm that it by to the with valuable end connecting already of with enhancing we technology enterprise benefit you effect of communicate our government are legacy advantage going XG.mil with to military when F-XX about going a platform our to satellites value I'm them directly, is in by network deterrent that this

energized prospect. I'm about So the growth very

a we've a number happen. sectors it positioned to help we whole I it. that interact commercial capability got unique think of with And to uniquely a in have to drive industry capability

Douglas Harned

is you follow-up doing? administration embedded point, that now. the inflection in talk can right what respect to a of something that, to when Congress what be on the as stands I seem up for should budget is Or the doing, it lot already is we If about set looking budget the for doesn't with it because growth this is

James Taiclet

The inflection point of need does within will not let's say. is here, we system But the Doug. move work abruptly,

way, be So its will, migrate a deliberate a period part will over a to it's and therefore Congress But that. time as allocate the to in that more bit if It's domains got the as far out. of turns we edge leading the services, going intend you attractive our little platforms have budget that budget ways most serve. all make we and in and within budget, products to the to in that

our make can to irrespective to government on not for use century a the of we're we're much network current way, depending line for effect top our fact, the how funded use expecting budget value competitive, to that money actually and shift get see in going grows. to and -- how more our way the and concept attractive, So more Rather, get XXst way future platforms independently. warfare and putative more

follow-up that. me Let Ken on to ask

Ken Possenriede

give a Hey, hopefully color more you Doug, I -- will little could, I complement if that'll Jim I said. just what give will

our with where XX% we where and you think rough portfolio going program. and think where so going, portfolio you are we're about if that are our and where F-XX, of numbers So, we're XX%, and about we

what's look COVID key our the rebaseline. Block what is now midst office And So production our basically at of Lot X to on XX. Refresh The get joint in the with to constituents working right product X a -- and to technology XX we're due all Lot -- program the onto sense. trying customer for called makes that's and production

when anywhere couple technology to As and sure deliver aircraft. XXX XXX the put into on we're that make that sense next years year aircraft. going we you recall, to makes year key What next this from maximize we to

the with October, to but production see you're hopefully give it'll data pushed slightly customer So to gets that aiding, show when in likely going to be if we revealed reveal right but will. also able once and -- it's be the out that along the of you likely we'll plateau trend to

at definitely of there XX% think I of in only are stood couple years, us production there least in you opportunity next some opportunity So the is for a sustainment bases it, XX%, up. if from think is the about likely There roughly standpoint.

of are to So sparing to there. which the fleet have in do lot the this some years, modernize have work more fleet. a aircraft talked years. that next are just already customer, to in working fleet still next aircraft X,XXX couple the new I We're also many the of we to about to of have with Think couple going have require to modernization we're going on of we're put that going the in in over technology more also to going aircraft in the aircraft

area. to So to -- is have me, a play with F-XX with Aeronautics, you of Missile that's a strong platform. Sticking the one our Defense Aeronautics become we will line is top an have products. part continue to excuse internationally, Air that backlog XXX integrated we going which Skunk That's see aircraft that And sticking of grow international larger going that demand Works. as for sticking just

to deliver win those aircraft vertical in plus decade there's program, us forward, of CH-XX our Space. the there's at when hopefully, And of which a starting And record then programs. a look then in an give other future will lift, we're Israelis, that just interest have this that middle be uplift going we huge helicopter countries a it'll you XXX programs, couple If to platform.

decade, National to and going have to we'll NGI, OPIR, the dramatically of classified Security a production programs not portfolio. will which this to whether uplift see going some into part middle be you're going us some nice it's agree, I hypersonics, it's Space, then go You mentioned there. those in of that give complimentary strong is move growth but the that needle,

Complementing So we forward. our said, prospects we feel what going good Jim pretty about good. feel pretty

Operator

Our is from next von go Rumohr question Cowen. ahead. with Please Cai

Cai von Rumohr

Thanks much given the classified good overall and issue. so Yes. quarter,

an did the happen? then And this you this So the ASR, time, Because you I ASR. thought, would coming, in had at the the you -- would ASR quarter. saw if have did do adjustment. you classified it a waited would Did you have you to know

Ken Possenriede

Hey, that. Cai. Good to This I is take Ken. you. to will morning. Good talk

then -- So the million place as basically you market do remain to go be to soon market not back a just ASR, We're in continue thought sheet. the think market. to That you our Aerojet again trade We're in that the April, stock our enter if of about absolutely after sense we put where to as we open but today. based and if allowed highly $XXX which going makes more to to balance on into an when going we're have our large able that. was it mentioned we stock, our price as earnings. did trading is process we're we're that going did after ASR. the we to we buy we're were again, we when Rocketdyne, the today, to before, that may ASR, have to would we and after, day cash day have, in And the it amount back on been I the look have continue cash believe thought that remains still going at And likely

off a the also to do period. time charge, Regarding Martin that provide program. the then Lockheed Lockheed when basically an one, a function. we deep was process Martin based a we only in knew joint customer, on review the standpoint, assurance did And happened dive Cai, from clear, that It additional became about we had May to

owe we've situation done period, reported Jim, so a reported comeback we in the called Board, business Board fact, our done we St. and September. classified Frank in the time our out out meeting, May time security June in period. John, thorough that very and also committee the we COO, a what's the And in actually assessment to of to had and myself, So and was and a them

initiated very charge. all we're that in So with May, comfortable the

Just give XX% that estimate of and cost is has new a development portion little of embedded for XX% in complete. a other program. that of is as to flavor of million, $XXX the already roughly occurred to that this Think the the bit of that

assuming program goes with So to complete prior the is new that -- me, estimate on we're forward the not that a this ETC. excuse current over the It embedded. with

So we And after was was we it a timing on in a good standpoint, from handle ASR put that. think have place. the

Operator

question Poponak next Our go is from Sachs. Noah ahead. Please with Goldman

Noah Poponak

Hey, everybody. good morning,

James Taiclet

morning, Noah. Good

Noah Poponak

do of happened, that in you pre performance you and reset it right the segment implies And do doesn't confident, -- didn't EBIT performance segment is? guidance it that think then, -- maybe what where for I detail just you're -- can segment number you're back said total what But Ken, the into only folding much Aeronautics this margin, And the mentioned how plus there's it's you classified type can How the you to any with so issue where exactly linger. XQ. annual you provide. up, know you even on program incremental picks release color the it above the just could was revised F-XX margin margin give that go I on up.

can any goes color where the here? on provide segments from you margin So

Ken Possenriede

bet. You

on enough call, we are you so be know, for But assure much say this could everybody the first classified I'll I'll as to I've approval the guys about what where can. yes, say. experience able transparent on got And you we've given program. I So, talk customer. the let's from as there's and we only And hopefully,

have, you, today all believe So, I we've done turn believe out these we development this, done successful believe, and on we I'll And reviews additional based performance Cai's schedule standpoint, question, are we ultimately say reviews. the opportunities with business a is it's customer. production We've the a associated opportunity. and assure we there case, We that production into -- of independent to strong think information very still a be as there. program. lot no, then there contract also given that could a will I a answered will from And

So program that utilize about this out And will for be all Lockheed Martin to going and the a for the customers program it'll this are there talking customers. great be Corporation. a I'm good our

right. it got you've Noah, Aeronautics, Regarding

believe on For portfolio. risk see the there's F-XX. see of got it's the little And year, retirements parts mentioned niches, there next primarily as there the production XX% over second F-XX, to to assuming we'll us there. standpoint, XXX. are to taken lots we a retirement have in It Block -- half past in about on until other a retirements. cost other we programs. production, out But sales. see of on on of some our we're initiatives, improved that basically be F-XX pause the we assuming bit takeout we'll comments cost there and opportunities other are strong think will Back the have we We return for the out I competitive risk risk that some from made year. X probably improvement also performance as be have some performance our

above right. got you second bit half think comfortable XX% year. sales the on little XX% being Aeronautics, that or around a the I we return feel So of for

Operator

go go ahead. we'll with Kristine next to Morgan Stanley. Liwag And Please

Kristine Liwag

Good Jim. Hi, Ken. good morning, morning,

James Taiclet

morning. Good

Ken Possenriede

Hi.

Kristine Liwag

be HELIOS that advanced of of it category. has DoD is key directed meaningful highlighted Maybe important the XX DDG much the areas years? fielding Navy the deploy we maybe capabilities a far also, energy could kind as we platform until this How see Arleigh is the you to that How technology how line X of switching are long-term of growth a it in Burke? the gears, next this the and away miniaturization on of has an contributor where could one the And been top F-XX? like

Ken Possenriede

hey, Ken. one. Kristine, take it's -- that So I'll

the these the with we the pleased contracts we've customers And yes, very thick think on with going. also that pleased we're where described. the that performance you we And programs. of So, are in had we're

size will of from what it put see relative increase that our it perspective will we'll think accretive But I top have is. just in a with you but it's continue going the to involvement, for a be to impact. dramatic in be a $XX I'd a line X a next -- say, at least material to billion Kristine, standpoint. years. grow, the to that company It's not

we're with miniaturization, the that of terms In customer. working

on we're away based update I But when that what give. think is one give though. we ways from some to will seen, we've you an there

Operator

Walton And with Please go UBS. go Myles next to we'll ahead.

Myles Walton

$X.X back Ken, Good half. flow billion, another those second implied done that if get you that trends Thanks. might progressing the obviously ever half Can you've that -- And similarly, morning. -- to can you. the greater F-XX it such that on would talk then just materially in get than this about XXX, to second billion close have $X.X confidence it better than one for will imply you be the is to actually you can level do the you color backlog, is year. XXX cash

Just color on Thanks. those things. two

Ken Possenriede

You're right.

that the Block that's billion, giving comfort, this COVID. the And do midst you now. We're share $X lion over is that -- path to a more third on rough in the $X.X that. little third the And close seeing close quarter. we in this by numbers, And that see really we're the about share share through quarter. and is -- me, share on to assets on in just we on think -- excuse due look performance F-XX much Aeronautics. color, of most of the quarter is And by with give to the the we a down customer the to fourth collection ops end immaterial needs bullish of X. performance-based we're well. only billion be of is what of the amounts payments; quite you it of X come lion close if at working And will, for done in January hopefully cash we but they lion The timing a liquidate you of that program is of that cash that -- to another that of we've quarter, the as done midst some will $X.X from that driver grow you to This specifically amount, to quarter. going a the there we first to comfort, where the standpoint from billion. will little be million we will I if total we've quarter. driven contract of There second the quarter in before not a I year liquidating lion of most share assets will, $X.X lion bit contract and for are miles you that Myles, point I'm give of fourth is December RMS the will the based contract fourth that our if of is once by tell the believe driven and still contract lot think assets really work payments finish, feel that's at $XXX timing, the billion. and year. a third the the assets I'm which based renegotiating, And in that F-XX is grew is Aeronautics. We then on growing for to roughly you you would $X.X But an in and need F-XX. the to when the And we We're some So by the half of billion be

think In we've that. stated backlog, terms of I already

all needs international But job, is difficult that this would very this We of are Lot the to going thought close settle we year. because thought we of what doing lot quarter. got So but year. really demands the customers. close joint the last year. and XX in that to services a they're of comfort think program little just no going job believe that office and third the a you've coordinating the have the has plus that'll constituents, it we great working Lot settle going with the complications now There's F-XX think a to that it's We for on we XX, of

out actually we're about backlog So that's which looking timing, year right billion. that to It's just that a to order. at close means we're And $XXX next end sizable forecasting now this year.

is year. It'll gotten enough advanced and that's Martin, us. backlog. backlog I'll for just not stress So Lockheed on we've XX, a where we're for going funding to all again, an optically timing. XX in be reduction impact it this But to those actually erode And Lots

Operator

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

Peter Arment

Yes. Jim and Good morning, Ken.

James Taiclet

Good morning.

Peter Arment

given upon sticking of any question, the can making touch F-XX I of could And Ken, to maybe, into continues on sustainment discussion come lifecycle increase F-XX, that investments internal the you your well? to upon if on reduce touch contract expect think and Jim that costs you your PBL play potential, guess spending, and grow louder, could PBL do of maybe you I when guess Lockheed to is front the of Air just maybe in sort the Force? Hey with you contract just just as

James Taiclet

about to Force a and as there's Sure. the give of Air you can tell you've on contractual and performance We've a to jets airplane defending commanders that the doing the in But got and reasonable nearly make jet can But operationally fly happening, pilot, from million expect go investments Peter. former the first of flying hour a the flight sustainability failure the spent spare to they'll metrics, between get F-XX we'll the And all, of there's line, good forward. cause I the things to themselves. go before pilots and perspective lot actually $XXX requirement. date this and the improve double to to there, continue you are missions, that meaning a that day. the where because you investments you the It's can country when metric, we

On they're to as as mission, the about in contractual a that labor fourth a as pilots and twice as reliable from about of likely flight on needed fly the hours so get other meanwhile, for fighter. when of each tail airplane gen fourth mission get in for top assignment maintenance And they they And the generation two-thirds plane. number of it's is are of that, the day, an those any the hours twice any given requirements.

different and out either bases, for get have the different or shoulders aircraft, wings, frontline types F-XX So the will, squadrons legacy in the commanders they've their if commanded aircraft. to in talk of they'll sort if you is to of head that of F-XXs and operations, of above you and tell you other performance area aircraft, who

had haven't can was and XX% really, I where if they and tell with it been In that's week. any that before, sorties sometimes F-XXs, Air the Force back top had And to done X,XXX nearly -- mission recently, XX%, strong, in CENTCOM you that just capable all really XX%, rate got about was out given fact, XX They from shelf. months will. the that's tour, you this

met million other we're about about We're going work XX% Lockheed that to the with and the chairman on coming will. the to out we cost. need last years, X chiefs total only hand, taken somehow affordability over but with together us Now, cost of of Already, of few keeps service of can if up. and address you the XX% the investment XX% purview, our XX% has this. next that $XXX years each shoot to the over the of we to implore I've all on Martin the control for another

cost. strategy military government propulsion If address we don't to not to all-in together have So are and goals. hit going XX% is an this we the

when the again, the we team. get this meet on chairman, and the can chiefs hopefully address a addressed team it so, soon all as and only with chiefs, way the be and I tiger integrated an will together service successfully And in with

A to it's per pull So at an in I the to hour that on a way flying there agree hour, but team going with approach. model of get I'm that's doing it. keep together we're Aeronautics personally involved that But an all-in And to trying this done. our an the do approach of got to XX,XXX team get part, how is be to to we’re -- wider course. we're cost going

Ken Possenriede

starting So, based Peter, just a to said, timing, of we what just on Jim interest. are see based on lot

we But take fully mentioned, of do the we now. going we're responding Jim think industry If an a we pieces logistics performance what propulsion year, consortium. based that next then for be we lot be contract level targets, going service our with probably for how a we to all to we the making standpoint of paper to this described drive to or targets over for us top industry to these answer is not believe to the services described as to agreements. engaged RFP. some And these hopeful energy you could we're conventional return incentivized soon type And from play recall, and that's would for early Whitney paper we are have Pratt that we how That likely would it industry proposal. great us. a industry a up embedded. on us. for of key costs, enhancement sign request progress going white hit And a play issued the to is remind the And assuming concept. call just achieve white that be could you line a They're I'll And I'll be out under down potentially sales

Operator

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

David Strauss

everyone. Good Thanks. morning,

James Taiclet

morning. Good

David Strauss

plus that the you're next-gen is the role talk dominance that program, that that? about stands? program Thanks. up. this the you The air the where 'XX Is Can issue, classified nice And fiscal or all work movement whether saw at budget, on playing not? R&D I -- guess, in a Ken, also any then, done there could to point, amortization do you potentially touch been on tax

James Taiclet

NGAD there not our answer But what unfortunately else classified David, great build I'll Sure. discuss customers, NGAD, a fifth to The I gen will both. of is you've we everything that's heard our the not is -- unfortunately, say that And Yes, our F-XX classified. say is I the take for can't out about role NGAD news regarding aircraft. DoD be role the the everything thing is NGAD. pair good think still or going only and is still which is.

we amortization the with are our David, not tax unfortunately time, us it's R&D, Regarding experts lot settled. working with constituents. that When to be we're in October, out telling of of still our come data at likely trend a

impact billion -- will greater offer right see year. issue what now away is 'XX. we or 'XX would does it from or likely cash, this trend for cash operations goes assuming of deferred That So we we and next gets is not $X data see

in going through midst long plan. of So our we're the range

the for And it conventional really independent goes, to we're we we'll next also But to Lockheed just then continue We're But is -- reaffirm hopeful regardless, years, for and into $X.X to forward internal generating interpreting. or able I'll year industry our billion employees, we to then impact thing right us, in mean, shareholders. fair that. our and for call is development a organic impact that 'XX. was a than research which be a either what cash inorganic going state cash hopefully we'll impact. sees this deferred what that gets Martin rather our and billion it and years. what that investments issue are would numbers, repealed, amortization see a to this also to this rough we're And have out I X is it way we'll than scenario hearing. see now one interpreted the for where So $X.X couple that's strong million amount or us $XXX back gets path be differently it give use a

Operator

we'll go to Credit Rob go ahead. with Next, Spingarn Suisse. Please

Robert Spingarn

morning. Hey, good

James Taiclet

Hey.

Robert Spingarn

answer the architecture which another solutions as in finding fair to a talk into network of lot view listened listening locking. amount before contractors. Jim, to less hear your ways and you to might Doug's when them I form to DoD, effects, question I some about But locked spoke be about a open

that a resolves you've deliver while So you there. bit desires? whether can vision And that think it's talk DoD's to both if the how tension, meeting you articulated, also Lockheed broader about so,

James Taiclet

open has will, experience architecture example. development two XG foundation, industry baseline, network and the and Sure. been you compatible Rob, for are for completely essential where the be or and things in if my was recent telecom, that the it XG tech telecom that

radio -- to trial, But time, Martin we're my platforms the in and allied could cell sky and build because Lockheed a or data in tower old that add Things another to Aerospace, I with the architecture. we is products. our roadmap connecting on network and in approach whole trying of frankly, and and want based of product install, my as Defense across, U-X, an these this point in I successfully our F-XX the demonstrate we basically the a that to these we there our architecture links And example, down products build the then you can have as counterparts this Eurofighter, traditional internally The is like architecture. and eventually. completely a of industry produce and road. control former to a the in So open call all even aircraft, are the out building said and aircraft, We network the collaborating open telecom radio partners the Lockheed same At earlier, we're a should are say, effect of can of already an F-XX, counterparts, broadly with F-XX tech eagerly U-X, to future course, out you even the open we for platforms where some in open as Internet again, demonstrated here. we're

will Lockheed a is and take And something diminish. leadership to where that's you open vendor matter here. going where have and can, at the is Martin a great of this think, so I speed must speak, So But can an performance. architecture forward and lock, position this

Operator

Jefferies. is question Please Sheila next go with from ahead. Our Kahyaoglu

Sheila Kahyaoglu

Jim Good Ken. morning, and

James Taiclet

morning. Good

Sheila Kahyaoglu

I the across the Maybe where versus classified are business risk business? just how general, the is -- quantify update in opportunities? you most rest you you seeing businesses? of it wondering the on maybe, How was rest us big of And if could the do segment

James Taiclet

Hey, Sheila, Sure. morning. that. good take I'll

our the Aeronautics our upon the you talking frown us portfolio. about if have think size in of and classified business So, but classified, speaking, it, largest generally from would about yes, customers Space

in I'll also last that not this accelerated to in talked unfortunate lot fire would seems that least, and and opportunities have missiles we trending Third not something stress Space. that's control, program has be but recent, see then We is Aeronautics, missed a in but fourth, And about been RMS. an And on up today. charge it we've way. this but be of

also programs thing Missiles in the go to still I portfolio business program As There's very do going stress that the Fire production. will this requires grow. continue earlier, a has strong case when future we've will asked in Aeronautics not development talked which other will continue that forward, the to believe grow. in some classified is about into too and Control, also that distant capital that won and we we

of So we Martin. Lockheed the growing of see non-classified the Martin faster classified portion portion than Lockheed

processes reaffirm and Regarding that's that black white we timely how that of of because processes have of the about auditors, try do and we we them internal Security classified just go are our the the -- are Board, Committee classified versus we that identical to our that external the -- in I have world, question we question and also that demonstrate the one also Organization recall answered that we thing our a part when that. the is instrumental run world part business that and to audit. and put to E&Y, non-classified, is the in

non-classified mirror So the doing world. we key a to the from classified is process in what the into we're try standpoint

Operator

Next we'll go Please Morgan. Seifman to ahead. Seth with go J.P.

Seth Seifman

very everyone. thanks. Thanks good much and morning, Hey,

James Taiclet

morning, Good Seth.

Seth Seifman

a let's talked mid range. F-XX think production about -- was being wondering, in we I Ken, past F-XX mentioned the revenue earlier. probably outlook the say, this and I was sales you the production about little the in we've year rebaselining morning. If the, good Ken, $XX billion

your this about does in that the something rebaselining, how it head to you average of know, three rebaselining $XX don't XXX variants. the assume would next into year, I is per revenue I which of get But expectations? how think -- As production for maybe price aircraft And for eventually specifically something then, it's on the million where times or that the plateau, like range up XXXX? that. affect does

Ken Possenriede

that still you. working the I the that Office Program of good as program and morning we're rebaseline customers. as services think international the Seth, Thanks, and quarterback, the dealing who through Yes, -- said manager with earlier, so Joint the to with still we're Yes.

year There get Jim's a were little plateau from the today I more. final be XXX we the interest hunt base was will So is services could the other of don't That a Switzerland. aircraft and thing We're this just of deal plan the all aircraft. I is. an don't we our make And Canada. going is than We aircraft, XXX. highly mean the I that in are I know offer X deliver thought. than it's to this aircraft will Seth. course, out less be say not like big And United next the including year, to the back many customer we bit next And than future and comments, sound customers in be but XXX say, farther are years. and for to have be is forecasted States. what rebase Finland. likely the we generation less notified the out again, This aircraft Berra, in It And in what going it'll XXX it'll extend Yogi could to less less X, ultimately put that likely just spot only won but would our into big, fighter -- that in that's something on, for than this and best in this us. -- just I'm for opening been. else plateau may line we'll then you're suggesting perhaps what it other have than take

demand there aircraft. think a we is for this out there strong So

and variant you'll it's not B The prices, where to due we in that I'm to customer or the are the down learning is aircraft, stay the that in where we increase you'll to where the inflation likely A they Regarding on we are trying a capabilities either of an come regarding due quantities, it but with modest we variant, and prices today. see likely to the is where price curve. on with negotiate and are where of price aircraft phone, the to with see -- it C based the want on the learning, due are in variant, just added increase continue

October factor in got that in. time You should better to the is. answer what terms of We a the you impact have in all period for

Operator

ahead. And Joe Please next DeNardi go Stifel. with we'll go to

Joseph DeNardi

there in more a of less there? just comment on related on to any you. of Thanks. technology is Or of is the just from much on any about this insertion? kind on pausing you are kind been the how maybe -- just talk pressure seeing the focus F-XX Good on you modernization morning. shift under of Ken, sustainment? arrows administration? And can Is are challenges then other readiness, portfolio And you're focus just that to Thank facing related risk margins, specifically F-XX? on Block your X there retirements

Ken Possenriede

You bet, Joe. Good morning.

of the there of we flight per made Well, is get think sustainment, F-XX, then made to to down. So comments sustainment course, in demand. hour want which Jim sustainment, on strong cost back the I still and earlier, we see

demand out there there, is going is the robust that there, ensure fielded sustainment grow the there's more for have. there. we that keen aircraft the And out have program to want more available we also but aircraft We a to desire

And of We F-XXs F-XX. sustainment quite And sales with Force contract not of on not to distant United the think F-XX, bit. aircraft. to sunset, I sustainment just that a -- sustain going also a see you a got big contract a I for mean, that. gotten sustainment may believe the quite, mentioned And have of decline in are would the current $X I their they're international billion. F-XX $X -- over Air eventually think a going being billion customers. foreseeable get this say, States say a little but forward, it's been actually for too while portion is past. We we've F-XX in since a future we've

So learning interest of as in aircraft this down demand in or Block from in not future. piece X negotiations as going these the of the our we to a taking coming -- was we're curve, and because And well, from planned curve learning Joe, Works, away going then, think -- the risks to is a get ultimately second now, away of not costs not a on distant it's learning curve Skunk seeing see a still the they'll I margins. sustainment a we don't curve question big we're Yes, what but contract, sunsetted standpoint now, agree too C-XXX, And that right is U-X your that -- pause down retirements. a we're is sustainment either. internationally. learning coming down the take as robust

time. that into take risks So want see we we next those to performance at before continued retirements year

Block until margins. very think And are the would likely These keep of we'll margins year. pausing next take up single-digit them but margins, that so high, X double-digit into low retirements risk

Greg Gardner

Greg. is Hey, John, this

I think hour. we've up the at the of top come

will So it to over final I Jim back some turn thoughts. for

James Taiclet

Greg. right, will I by just Thanks. All our stand reinforcing Look, commitments.

First, more John thereby just our morning. addition event and and generation then. making attractive a this for XXst more again Century join platforms Also transformation for a everybody being digital delivering investments investor Thank services in to creating our and to us all. in deterrent. can make innovation, that and you resilient supporting as can Warfare afterwards us We going in an that vision, And cash effective thank dividend strong customer, and the for strong more will that. the call today. us have hope to you want you August. we upcoming We're deliver conclude you to And you joining I long-term value to here which

Lockheed Martin (LMT) 26 Jul 212021 Q2 Earnings call transcript