LMT - Earnings call transcript Q3 2021 | Lockheed Martin Corporation

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Operator

Good day and welcome everyone to the Lockheed Martin Third 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 caller to Mr. Greg Gardner, Vice President of Investor Relations, please go ahead, sir.

Greg Gardner

Thank you, John. morning. good And to earnings like to third our I call. welcome XXXX conference quarter would everyone joining the John today and Chief me on Officer. Chief Chairman, Taiclet, Financial Executive President, our Officer, and Mollard, Acting call our are James not Statements considered fact pursuant the Forward-looking that of provisions made are Safe are historical Harbor made and federal call in to today's are statements securities law. materially from Forward-looking the those statements. in differ projected may results Actual may of cause SEC our results Please see the for description from factors of release that Forward-looking materially today's differ filings some the statements. actual a to and in press those

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

James Taiclet

as horizon. planning and month, capabilities our driving time executive accelerating shareholders process. Thanks, few I a and five-year and today a But on updated our guidance Greg. provide lead quarter, results, for Sales for Outlook completed our Last joining information provide team In to third strategic call. and us everyone quarterly our XXXX earnings leadership that discuss we first John, detailed annual Good over I review our customers will XXXX plans a of you XXXX. will and trending for moments, per-share thank to our morning, our value financial

today, all year, increasing ongoing priorities financial of our and slightly will across current chain, a more U.S. reviews sales expectation that decline on in customer with increase strategic forecast. in shifts extended extended factors, performance level. on ability size to the the ahead, the our will rate our the growth projections, recently of such all U.S. and forces Program F-XX Afghanistan, in re-nationalization significant as with primary Joint the remarks. over forward global future deliveries effects and sales timelines to scope past aircraft and rebase influence sales is and program the slightly assessment programs, little of geopolitical moderating Given growth starts, highly our of through operating on XXXX AWE there a pandemic I'll environment in us sales landscape will our available changes budgets, of anticipate withdrawal Office growth in-depth information our But This by steadily competitive over in XXXX in our production these rates the are from the a defense address our financial program. Based of It underpin expected lining longer-term trajectory ultimate five our of reflects completed conducted the from forecast. coming of events the we under COVID XXXX budget, in recent UK. supply my look years. XXXX. defense growth continuing the driven our in was the the we number then areas agreement And wait that sales our current delivery We a later new as the the agreement including four

XXXX. XXXX following ongoing of Hypersonics Hypersonics of is production and performing portfolio. the these completion successful are between programs testing We're Multiple our within enter six growth and Company, programs across expected areas to evaluation activity. and the first The currently future on

within achievement and the The within classified of second Three our activity. classified objectives those significant growth is programs pending engaged four of our business are in area programs. areas successful development

begin between and XX again, to XX. production, to the transition expect We from development

programs area of lies growth The expected current our in of third record.

competition future FARA mission vertical requirements, that CH-XXK customers critical sustainment Our with the multiple with portfolio tanker lift defense. top-line significant meaningful stages. long-term in increased program. heavy aligned national includes several from FLRAA Ballistic a our activity, growth new business profile helicopter, and is result, our the to next-generation accelerate business KCY for Fleet The are and production entering This And, we programs Missile. program, awards, we're competitions. These PAC-X the the to area to have finally, opportunities including as and and modernization growth and new represent our interceptor the enhancements lift, F-XX projects each very well rates, projected

near for a our would disciplined XXXX. I while of for Now expected allocation to central strategy and positioned in The remaining to driving the term returns creation using strong in capital tenet return dynamic our shareholders our process. discuss like is well for value our strategy growth

These their shareholders significantly the include and significant reinvest going a necessary billion will are requirements deterring defeating into payments growth our to independent $X.X made business signature our our These nearly return meet re-purchase operations. dividend continue and making customers program. growth, of in opportunities domains across they're to missions to We first and that in we $X expenditures in drive continue with area. drive execute business To if high-value growth. research capital capital strengthen our to our development and through systems core organic expanded the customers increasing being to pacing pursuing all of will and investments will sustainable inorganic actionable spending And solutions year. will business. we cash platforms investments investments billion threats of annual organic share Concurrently, we need each approximately provide our

$X.XX Lockheed by our providing or approximately with investors, excess expanded dividend. substantial the also board return positioning year techniques a our investments cash customers, XXth making yield dividend $X.XX, especially value Last After X% performance have This campaigns. Along month, dividends we future. the consecutive These you, program. them and shareholders, transforming to significant to our of free through to will growth, to our factories leveled annually, on available dividends these manufacturing, programs, Martin's organic we the expect an share with building strong us and to additional And board to and digital with business an our enterprise support increased also prevail shareholders the $XX.XX we ensure engineering, investments while can delivering returning provide share quarterly making that action to per a share are current and increased and and in sustainment through will state-of-the-art flows shareholders quarterly upcoming now returns. tools areas and the our drive operations to share, we per outstanding repurchases. by are Additionally, model-based architecture. business marks internal payment, repurchase engineering greatly continue quarterly cash increased

through below will next if With billion our stock the $X share current warrant. we at press discussed month, share value, our repurchase a authority calculate $X repurchase repurchase intrinsic our to by the today's over what three As bringing XXXX. XX, well in of And of last authority our first anticipate billion already planned $X increased my billion, repurchased have we trading up shares buybacks, quarters conditions XX the our level significantly shares Company's on months, that $X we recommendation, the total of release, approximately board remaining to our we've I increased share as billion. and

per our lead capital As the to metric. a That's to prioritizing dynamically shareholder cash we're that flow free highest note on investments return growing share. final value, to allocate new opportunities, going

pursuing will to authorization, to growth. capital We acquisitions, our evaluate long-term remain opportunistic to reinvest current business additional purchase continue bolt-on accretive drive and share to increases and our

built shareholders to and multiple flexibility have use with pursue long-term focus capital the Balance our will this significant so. creation. it returning while firepower we shareholders. Balance We Sheet our and on We do of to growth value Sheet avenues Consistent to

the Sheet and Rocketdyne transaction, returns provide in to our and quarter the we closing provides with the us drive of future portfolio the now and robust continue approval The to to transaction capability moving close on growth. Aerojet support in regulatory Balance process customers our anticipate strong XXXX. first to continues through invest shareholders Aerojet Our Rocketdyne

your answer F-XX of international call establishing delivery Joint opportunities investor including into of of FMS the international a and of and with production over plan X for I to we delivered baseline out the future. as over decades community, record I'll turn well customers, suppliers, look as for Before strong us and The Program stable, I'll program our XXX organization, John, program highlight well our the all a partners will ahead Aeronautics The and to our you, government's And successful efforts countries call the forward that has program partner office, to the government, industry U.S. over we and far. turn to strength. that, the come. John to the teammates With like I'd you visibility Organization, of entire profile and important to provide jets, rejoin and new aircraft and to continuing aircraft to X production including the that so services X,XXX customers over have to questions. add is

John Mollard

good Thanks, Jim. everyone. And morning,

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

Let's an our billion. and was revenue with of chain than Control across anticipated sales, result Missiles, in recorded we of Fire these This and the will begin next months. These $XX we suppliers space. quarter overview with increased expectation from impacts this in supply enterprise. is we below multiple operational segment the reduction across Chart as X impacts to third larger realized over Starting Aeronautics, XX-XX expectation strong volume, sales on performance billion our span $X.X that Despite profit and operating year-over-year our incrementally disruptions activity. recover

of cash dealing financial $X.X previously store experienced with third billion during our caused pension accelerating our included suppliers of that the a disruptions earnings the chain operations generated $X.XX we practice and underscore continued payments non-cash quarter-end. many at global are fact transaction. We the accelerated $X.XX per charge pandemic. in our with billion $X.X of chain the Our supply related The still share quarter, and payment to by from of stress supply announced

to amounts addition, we return XXXX, our a payments data In capital discuss share through further few minutes. dividend will repurchase have in continue substantial which and shareholders activity. provided we trending both we to for of And

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

quarter levels, primarily because space the business of As release, earnings below our third XXXX are in area. program re-nationalization our the we establishment weapons atomic noted sales in of our

business up performance our for Chart from quarter. is the delays, four segment Despite notably activity, earnings production volume, chain supply A sales recent this reflect profit on both within third most operational also strong Control sales and on quarter significant all reduction risk share areas. X last per quarter programs in operating and and Fire across F-XX the several Missiles third retirements year. our production shows resulted in Our space.

share completed back of with Our August. adjusted the associated non-cash billion $X.XX earnings liability On per we an mark-to-market charge another XXXX than across in operating -transaction $X.XX pre margins, earnings share $X.XX, account, reduced incorporates was Ventures transfer improved quarter our $X.X segment pension Martin higher to gains basis, of a our of portfolio. Lockheed per XX% our results and due share

repurchase across cash X, cash On technologies. While greater look realized $X is portfolio our dividend more during future cash than return billion. our made $X repurchased in capital and volatility our XXX% of expenditures expected, by evidenced $XXX of we free the $X.X operations, over flow In year-to-date including of cash deployment. early-stage will free year-to-date recent generation actions and dividend Subtracting $X billion multiple partnering in the year-to-date, Chart gains investments total, payments. these announcements. to million will focused almost from cash holdings of significant quarter, we represents our shares value from share forward our $X cutting-edge program balanced is investing going at And than in with increase nearly deployment year-to-date. on and our with shareholder-friendly shareholders companies associated companies of billion reinforce Ventures and as our the We've have in flow billion billion third continue

supporting from guidance Internationally, missions. customer help outlook updated to country across to of continue suppliers they has X lowered September. Ventures chain onto our pandemic items. and in from related reflect schedules, XXXX and plan the driven range, earnings by both midpoint impacts, program chain. recover non-operational small segment outlook operations We've and Outlook profit XXXX of supply we've maintain previously billion our for last investment in that Lockheed level for our to Moving per four-year payments discussed businesses plan We supply to Martin gains reflect and accelerated cash and emerged $X.X our as primarily from $X.XX our operating Chart update, medium share increased August to and The impacts current sales reduced the several our maintain to quarter's especially the for our

Chart area. the look XXXX X, a by take business Now, at we sales year current closer to to revisions turning

of As The affected activity supply Control been reduction Fire levels activity is higher more internationally our we anticipated Outlook discussed, in since the the through than a the XXXX have level return lower all Aeronautics, what we've and pandemic will Sales and coming two beginning normal activity been in of past experiencing see over than to the Missiles and assumes our by quarter. space chain months fourth supply that chain.

the estimated addition, Sales any on expected On for for in XXXX, segment our On with information decline of recent see $XX We've XX%. and at we Outlook our sales reduction the projected Executive sales segment at initial Chart In a potential information XXXX operating closer X, for Chart with take Order X.X% our we our safety XX, trending volume, expected excludes impacts our a results. XXXX. operating outlook trending associated look XXXX Federal and tracking approximately from for billion, remains protocols at XXXX profit contractors. margin

up a greater increase amended, accelerated billion. be year-end reminder, XXXX. of chain, a from United expecting will through basis. the on to capitalizing remain at just payments than, from costs. there to atomic segment cash million work under by margins to Also, of we year, earlier equal continue in outlook If XX% related This approximately a assumes $X creates cash the impacts to growth headwind Outlook supply year-over-year $X.X or we're $X.X maintaining be to We're given As operating tax could legislation our no the renationalization is reduced current and weapons operations experiencing year-over-year we current not anticipate projecting now billion. Kingdom's our at operations across R&D billion and support establishment level and this $XXX our payments

a forecast would cash XXXX. no chain assume multiyear longer there to supply prior beyond payments Our our be accelerate need to

a XX% acquisition, closing statutory which Rocketdyne regulatory of We with any are Jim have assuming is required expected we rate including not currently first the now XXXX, to approval. during And Aerojet quarter associated subject occur of to corporate financial projections as tax the mentioned,

rates increased have year-end Turning interest to pension-related assumptions, since XXXX.

billion pension in higher for contributions Our year-to-date investors and trends, than pension X.X%. assumptions. based levels. on required current over have additional XX, rate year, our approximately through These XXXX. information million projects which actual of expected long-term been next two previously lowered we no return appendix. expected, for of Chart On We returns XXXX expected anticipate outlined $XXX include a have on to capital represents charts included asking we've to we In $X increase our approximately response the capital on deployment trends activities on XXXX topic this spending an

systems levels. security our products well-positioned a and billion we In addition, development $X.X planned while on execute opportunities. critical approximately over national are we increase and independent of missions investing customers as to to XXXX for their ensuring compete which anticipate business represents new they activities, research are our These enhance delivery made million $XXX being investments to

value recently as year are on back will in rate. $X We per as when quarterly they to over will increase intrinsic trading continue we they $X.XX And making dividend be next announced billion below Jim to now. buy based strategically believe shared payments also we our are earlier, shares share dividend our

billion shares XX are to up repurchase We $X next XX planning in opportunistically to months. to the over

We chart Sheet long-term our our significant are avenues and returning detail XX, of have trajectory all additional capital to some growth, firepower we while shareholders. to we F-XX Balance for expected sales. On on pursue confident provide flexibility the

Program with expected the our anticipated plan. Joint aircraft delivery earlier, requirements we mission on the Office the plan operations recently commented Jim decisions. supportive joint award This F-XX insertion of production reached in quantity and of and Technology timing intersection capabilities. represents new best both and chain agreement increasing As supply production

replan a and that this level at for as of stability outcome will to expected key joint of and XXXX future. with by predictability this XXX are provides elements aircraft to program. across Deliveries the We remain pleased are the production all very it foreseeable grow

We expected XXXX. F-XX throughout be Revenues in than also levels, decline the sales are sales XXXX the are balance timeframe. forecasted to around remain of and projecting XXXX in will levels XXXX lower will production slightly

As be pursue partnership in F-XX cost discussed, volume we've customer. primarily previously driven will hours in sales aggressively the while the our sustainment with aircraft growth and to rapidly, activity we as by continue associated of deployed flight takeout number grows

chain XX, Jim related and also along production impacts Chart fifth-generation development our conclude summary. unrivaled capabilities we our supply factors we're modest the have supply the our impacts, further projecting quarter. with based growth shaped Finally, To our updated experienced activity seeking third for customers on The and our other on We've our we and our aircraft. reduced plan higher-than-expected Outlook have and as during mentioned, for Outlook advancements expectations. chain the XXXX production F-XX and XXXX future continue

strong Sheet share. options Jim, cash Our will dedicated strong to generation allocation give free and prioritize multiple long-term grow cash flow with we our we remain our disciplined in the cash to which shareholders. And deploy to mission Balance and us echo Balance Q&A. investments, capital broad begin our per and will that, focused value ready John, on With dynamic creation Sheet, we're and employees, for customers a strategy, portfolio,

Operator

Certainly. [Operator to wish ask please and And ladies you gentlemen, a Instructions]. if question,

at your You by repeating may withdraw command. X-X time any question the

a Securities. of the first with ahead. speakerphone, before numbers. [Operator Global up Safran line please go using Seaport pressing Instructions] go pick you're And Please Rich handset If the the

Richard Safran

for some your guide upside budget long-term that What's in to Greg, it specifically, on your are 'XX. know funding Good Thanks the guide for beyond my some a operations from have if your the XXXX cash to an I plus-ups imply parts impact? to And assuming about question cash along two-part flow have John, President's And Jim, HASC flow guide? so to morning. you're SASC and is, and what more think request second a if John, what 'XX 'XX did you're is assuming or baseline looks from could remarks. that. want with and cash of fiscal lowered your to opening guide, 'XX included, late Jim, of like your you here the you question your I that to guide, just discuss bit the you

John Mollard

both It's that Yeah. parts I'll two-part Richard. Thanks, John. question. of take

chain. is for to us on the be following is our programs is end what easier, then to. appropriated it how maintain answer down obviously, and that programs run how regards assumptions budget up the around government direction And It's supply given the they the to the We're president's committee question XXXX first, any funding that the XXXX, applied the with to rates you. accelerate of say to appropriations And based contract fiscal programs. to this long appropriated, if question much for how programs. reflect than through vary I'd number to of going the it in about to and in by So year that as getting the $XXX budget on. information at based third will current come of us on are for encouraged we've incremental using trending the we're billion of factor markups much actually is our good in specific to support takes various really incremental a funding your in

So budgetary we're that should time really obviously, a action lot this be clarity in more in the planning you increased appropriations. any for XXXX, XXXX saying, have we a see in by I'll to outlook able when an finish to giving related by candidates and January being trends. trend the in opportunities for around we're down we're programs would updated good

multiyear go turning XXXXX. effect given be these are to does which second -- into do to change not had our Now, with R&D to assuming tax -- cash guidance like your operating going part, flow all we'd of guidance course, the was previously and prior metrics

cash changed will we've seen next year. than ahead to we guidance year payments gave XXXX. planning anticipate guidance and before the that's the XX as But to accelerated higher our say the You've look for supply the for only really flow of guidance factor since this And we we're chain. at we duration our got I XX now operating XX and the is level make multiyear to in

we of the of in in mentioned I XXXXX the we payments end we'd the we'd pandemic accelerated assumption worth track at chain would the assumed us no was accelerating XXXX be be program, $X.X think have previously would I year-end at being then that made But chain. end behind script, supply through payments billion with XXXX, unwind supply of in this our accelerated -- that the year.

assumes payments billion year at billion current the and we're the XXXX. and accelerated $X.X of end XX XX forecast, of at Our this at of the $X.X end payments of accelerated

the us. impacts are pandemic behind So

Before billion. our we $X.X that end XXXX, of by XX guide year-end increase would

Richard Safran

you. Thank

John Mollard

welcome, You're Rich.

Operator

question next Our with is Vertical Research, please from Rob ahead. go Stallard

Robert Stallard

Thanks so morning. much. Good

John Mollard

Rob. morning Good

Robert Stallard

quick after clarification period? your sales just margins as what for a accelerate expectations are operating your a you on question and you over say to question, then secondly, this five-year Outlook, And Thank Jim, growth Sales XXXX? you. expected did

James Taiclet

about. others, a again, John factors, like we we'll I'll record XXXX and we've then growth, of and also programs, can do Rob programs CH-XXK including talked on margin have operating on. speak Hypersonics, growth to and dependent meaningful that a point But number just believe beyond. on the Based up to a that etc., pick on that's of classified make rebound budget,

you idea, have growth accounts that this share come on latter benefit we the you yes, that so will. during is So frankly, want repurchase, when will to the period, as basically point to inflection use if period an and shareholders, accelerate amplified year-to that reduced does

with fully way, the right steady John? being pretty expect we along So margins that

John Mollard

Absolutely. Yeah.

Rob, for stop give competitive XXXX, Hypersonics, in that was of saying those record that X starts. is categories Jim remarks, scripted it's a in The kind four look the little categories and of at billion. just neighborhood Jim revenue, to to $XX When of mean, growth I new programs put I mentioned what subset classified color. So and with

compound the assuming on our these and we've will X assuming for period $XX growing through our grow business these opportunities gives record, hit annual the just out of bounce that Over me will rate, about revenue Yes. of talked and level about, growth longer-term which in comfort marks, set back now. about increasing years, X% worth some share of slight forward going Jim then that that of talked reiterate. competitive programs I billion of growth win trends a to growth we operational their XXXX. the at in next today we activity, and We're program programs hold that And that decline new continue XX has expecting would say increasing rates

working track is of On but get timeframe on lot good I cost are that a growth talk margins. that categories record this turn But there they those and to they're we But is margins, forward. can't on, we -- would certain And XX% seeing contracts, on of highlighted record given the the should early, margin margin the areas, growth will be progress accretive in activities going metric activities just There margin programs costs a The just get But investments new think hope target forward. us to a of us. be about be to XX% will we I the there dilutive some see we by evolution we growth, into programs 'XX, I areas. our start mention, if have there developmental moving is will good four lower start expectation those in going of be I that will are balance to the along portfolio will think the my incurring. which good recovery operating is news that classified and is reimbursable in the of that out for for in some we'll this program. programs. definition be we're activity will to new be 'XX, programs topic is lot continue the in of are a those 'XX is in assurance making

Operator

from is Research. Our Mike next question Wolfe go Please ahead. with Maugeri

Mike Maugeri

Thank Hey, you the time. good morning. for

the these forecast further then gave How sort on of growth and they underpinning for and more translate outlook are Rob's -- And four or what buckets. question, offset but these you into buckets? can you beyond to headwinds John, your return separately, following to anticipating a growth you specific to priorities So give quantify us the revenue Jim growth. XX in

John Mollard

which Yeah. and worth revenue from moving Mike, Sure semantically in Today, take time, about the to seeing John. four over then as number -- we're we're that but specifically activities happen, and talk into of I'll I good on number as and projection of billion-and-a-half gross But it's we're highest today. buckets environment, time from a billion will expect a and XXXX. into are of about the reported them first a will now, would are our proceed that talk a be development we maybe those growth $X being fully through assuming to any and If big headwinds, 'XX activity. able what doing four 'XX dollars by progress area. in making those is to production billion production, into a on move to Hypersonic they one we great the buckets, activities number first that $X.X of are visible

our additional is a to growth was that say this, PAC-X it not sustainment. and a in we talk classified a us. big area thought that set about be which Jim portfolio the to this like large second CH-XXK, trend it The that dilutive rate we in Missile mentioned record strong we you because, that that grow, aggregate given was of said, to I will growing is information. period some rate will the some worth component a a in Fleet in XXX of advances business, program can upfront is and of give $X.X as where the And our record is billion. today at will about time, have a will of least good impacts, idea growing through Ballistic at which will take because activity out delivering new I project portfolio that like we But be But top-level an there's of area expect CH-XXK, evolutions classified we above highlighting in The compound important in The When general activity. then it's X%, program, we be of so hesitated thought annual XXXX you program for downstream, and out even we making F-XX and in by programs ones of lot program investments -- highlighted say units. classified it and about. growth over X% I'll

think made just the record keeping is growth deliveries talked in And its in us program just which towards XXXX, are wildcards. that of final a on way new the record, the achieving will of business, program that I final long Greg go then set a of program are area about. but the

to binary FLRAA FARA in decisions going get the You're and competition. around competition, the

milestones we're We number very Jim recently, Airbus, we doing competitor. there's down select then achieved and we moved we program, frame we're as capable where business down a into be interceptor. this who making opportunity mission. great select, that tanker the a of is the for excited wildcard important other a of the of will bunch. as in One teaming areas think program sort ourselves that and We're announced successfully talked good An the about be very that'll we've heading. We've But with about a where about where new next-generation feel one progress. KCY

frame. we in extensive think would capabilities I that that go Air the onto mission bring experience

obviously, prevail us, could team. that growth outlook I translates related and be explosive. If rate The we which down or awarded do, next very you mean, excited and we're I FARA, that We're under interceptor. of think outcomes, as I those now, headwind I of we believe talked formidable let's is we're billion kind if $XX a be on FLRAA in tanker any guess obvious the very think a math to growth we And Jim doing we're through NGI there bucket. depending about the And script besides opportunity. $XXX Obviously and on on XXXX. next-generation about, is of we million. ahead substantial and our at how either which being will Yeah, enough look selected dollars. the to I like that programs in just very to program I of that billion the headwinds, well-positioned make about we're they roughly a large year-to-year AWE down said, and look tactically walk re-nationalization, a headwind either is XXXX to

we total now combine Afghan factors the category. I The is XXXX. very it out. next-generation time if F-XX in then military a the And then special plus mean, chart, I 'XX it's to programs withdrawal the of pivot we're two presence to of helicopter second had out, side, of to successful on one we're executed -- but about We about related next-generation have Black U.S. that the to call program. or those talked about But revenue out, Afghanistan. million see that's other one of the this 'XX delivered a from headwind $XXX contract by international helicopters the year-over-year years Hawk aggregates programs, production our In other and announced programs, the 'XX. in of The year F-XX And decrease a about ramping downtick you'll be they and the logistics projecting program, $XXX million. the you And impact in of doing going impacts. interceptor half The is And it's draw evolution, that ops, programs, support 'XX, of to it's on a in one moving us was down in $XXX related as some to of revenue, in primary deliver external from in revenue million successful those our moving we're program the OPI lifecycle then the -- both moving we down sort cut from by will up. highly Year-over-year, competitive and up it's revenue in in headwind. $XXX the number million I about we're are two where delivered peak. recently

of lot lot works growth, of in about as We have mentioned that $XXX we a to we million activity. is revenue classified XXXX. A being expect within of our our organization in skunk growing is do lift, activity to record be large we'd growth CH-XXK work $XXX going a heavy is year-over-year. final aeronautics. a where within about million million $XXX the And program, see in That to expect growth. year-over-year done

down the it's activity AWE doing. is headwind were balance, removal on So of that we the

Operator

from go please with Shapiro ahead. is Research, question Shapiro George next Our

George Shapiroi

Yes.

on on up follow comments Just to the sectors. your

the it's only at or hit, program so like would quarter. been more x, thought of RMS, running $XXX down that some if AWE you comment and billion, then the a AWE. half at Aeronautics sectors get million million dollars. to each And that for half a growth XXX billion be you obviously would that. And first really XX you First, the But in that in the you'd a I growth three had maybe if on there, overlaps think I Space XX, looked get some

status. kind So that of if just comment on you could

John Mollard

George. for Sure, question. Thanks the

the high And around won't activity had but what those do do play out by recur. if back press the higher of you $XXX AWE was because activity million you headwinds probably sort million that a what So second some in how I'll those quarter year-to-date. place, AWE remembered might $XXX saw year segment. have is of million, tailwinds million horn XXXX the you than go activity, took wrap-up quarter first -- in a activity we that and haven't you $XXX was still that level lot get quarter second say associated releases level the maybe of probably $XXX the our we to of first this

Aeronautics. segment first talked we about The is

we're margins, points. with of again, single-digit we Aeronautics levels lower think actually margins expecting XX decline, As as a at we're than XXXX slight to ahead decline a with rates Missiles it slight look in low Control, Within 'XX expecting -- basis low-single-digit a increase growth in slightly Fire think and a range. point low XX-XX basis of - XX

And with that's where we XX XXXX. go declines. you low we're Space, at up points as we expecting below With mid-single-digit XXXX. in a expecting well, If the place. margins up to then for RMS, going Obviously, AWE decline margins basis to expecting what maybe finally single-digit what comparable were with end reduction to to takes we're

James Taiclet

Jim. it's George,

one CH-XXK down you to Just little the on, to already pick give up. each color John RMS. a actually be is Hawk year-to-year, other. is They offset next more just mentioned going the Black and

helicopter XXX And similarly we a the million but combat plan XXXX it maybe in XXX million, it's two production let's call probably then they rescue get programs. upset. between, VH-XXA those about So XXX upside, down launch is to

that's but compete and might remember You that, Sub Future program. that to we're propulsion into of that a Conventional Australia Well, going a gotten before in. XXX, option, in nuclear be to submarine every we and for And part There deferred another were puts the in part it's VA, changes again, changes priorities, some takes in alliances. kicks -- administration, new while There's of if it's you so. are going will.

sure couple flattish get do maneuvering. next a of best to can our through going to And I kind out there's the Company. period settle the all to years all years think we to going take couple for to good, a it's but of that make that of they we're in the

going that it. returning George revenue, to cash add shareholders the to John as we've real And down got on quick to because we're to thing Double triple on really other far something As down earlier. say, said or I'd

that our voluntarily the payments customer us for supply to will COVID. this to the in thought to acceleration and it the all to you will we going industry, from good contribute was are be is continuing as first chain. country as John -- we the place. for good COVID of when back want get cash in And where This in when ways the of subsides, our are again, of own of recovering to something said, flow We number

So you on because some guys are questions. just a color asking there of really couple commentaries I think good

Operator

we go Alembic go Pete Global. next to with ahead. Please Skibitski And

Pete Skibitski

flow Hey, chain it insight morning. here greater us give Yes. terms unusually Good into cash period are we're seems guys, in like generous. a because where can the you supply

understand just So it's operating things in related to to us strains, why availability is they've strain. terms to why cash semiconductor or given you been or flow give like hard all insight chain supply that Can such greater in under? such COVID labor Is be mandates dire as the the it they'd financial shortage?

John Mollard

that commercial defense. aerospace the Pete, supplying part use. both question. I our, Yeah. chain that dual large is good mean, and of suppliers a our And I our are facing impact think supply to in they're

probably have stress and if their substantial the that decreases dual they aircraft, have make are to cash brakes. the parts operating nearly gear are think commercial operating have at really Those So landing suppliers, to we're on commercial do. supply the caught they're our that we for they'll chain strictly thing suppliers as in that us gear seen looking right make fixed costs landing as it's And defense, people the that of supply revenue on that flow. financially not for use make don't

we of interest, to It's lot there us as an in be the our capital, we in interest, a to need and it's here, is said, good We cash chain to of in have it's Jim generate self-preservation have to access for flow. element supply We successful successful. access our -- cash at rate. customers extremely industry's be frankly,

commitments. successful need partners the So while make it's chain voluntary, our need I term. to it's to especially XXX% dual and a use be We partners, not Altria. our we long mean, vendors for supply

Operator

we'll Epstein with go next America Securities. ahead. go Bank And to Ron Please of

Ron Epstein

to color and with lot mind is of no vision people's taken some return Century bit really us talked think, -- lot story about Hey, little when ultimately, least came that? cash war aperture fighter, perspective, of the we if good thing. Rocketdyne. if the -- And here sort are. sound growth. maybe maybe on what loose this war now bit it that seems the outsider's acquisition connectivity, has mean, on a what's we where of fighting, At a the give you It shifted just is now. story here. first with the seems you the shifted could a morning. unfair, Then It back what's a board, the strategy? from but and like you've you now bit. And Company on Jim, a on could we little I focus all an right might I Maybe up seems XXst little a

James Taiclet

a operational you're World run the agile, drive it we've which that customer, when before excellence, got but is thing where you end the your at government paradigm operating to least a record we're companies. day When strategy product deliver at dynamic of business, of changing mission-oriented industry since a II. the Lockheed government, first War under going you've been We're programs the driving long-term on a Now major at Ron to versus paradigm, our towards Martin in to is with right? be mentioned

and we that physical keep set strategy strategies evolve we to is dynamic because industry digital all like technologies. excellence current of as cost, merging is need an effectiveness customers make at the as and mission technologies U.S. building can industry in in of we're capital our to but bringing to of But it. Precision is technologies over operationally. that addition buy will. will those Architecture if world other and relatively attributes senior [Indiscernible] at etc. not we increase going of the That So Hypersonics, allocation we're all Travel, success. can find others Because our have shifting like some that the And of with after platforms for any developments computing financially platforms a way do, are Weapons, intend done, world of that We're but we Well, in by doing things there. in has an the world. government than our good shareholders that We're deliver in turn world that, really as IOTA, on externally. our that purchase our for understand to as will paradigm national benefit merging actually stuff. -- and we Space for has AI the the effective, changed much our efficient the there's we're like knows acquisition we is years we're our forecasting getting than be still some candidates of and regulatory largely traction with deliver industry far if world We're robust in be build bring working scale you good In a for our our technology networking. environment the XX:XX:XX] using customers and things a got got OEMS the the defense our and and we had that is towards and that But to bit. out as really with that because that platforms, as as attractive with and effective good faster services approach not in there to XG have our change the can more we strategy. to first you and I'd to platforms get accelerating the the officials liners meantime, two situations to specialized and into while M&A, to developments, how that defense [inaudible our and I'm digital its in distributed to had Company. those is defense. physical together just that more think is because to that merge it in a a in the burner customer Those ways we been in in also roadmaps accelerated having elsewhere that The the supply relative world, companies space is path industry It not their of ourselves by in capability at physical products national our more effective and we at it's tremendous the

major our the and have got now strategy. customer. there move for and doing Aerojet get iX partly Twenty-First acquisition is think we're, Century when to with to Rocketdyne warfare things need we're I which end in regulatory it some technology business we're does not acquisition trying But get to their to the up. M&A Thank that our to forward. it being use question. that open people you're is regime. shifting our to the kind for to with their to that The way, that. thing add of our the telecom there saying or misconception running okay, mainly Ron. do about want the one in We actual an just in We up down I we wanted isn't of technology not still that IP, want the that absolutely not right technology world. By this the become clear accelerate like be So has physical in and through road approach, is availability, technology, open the digital the and world commercial we We want because companies. -- those to make We're you to real-world, that things M&A we agile. window may you need that valuation, to included baseline

approach commercial via partner our licensing, standards our industry teaming, participation in spaces agreements, is into joined and those bodies accelerate leaders to So with capabilities maps. those road technology to

any have major intention emerging acquiring We those companies. commercial of of sector with no

target this liner real the have So Century world, we're the Defense. yeah, when be towards got and our dynamic being what run past XXst in to big still And that's and to. you've business up a National you agile we

John Mollard

Ron, And John. this is

this had articulating historically any as we for resonate come across to solution internally. surprise of embrace over bright actively which Martin level He's said. Company years, from change perspective, very probably And engineers, kind of come scientists really seeing ventures, an every creative we've we've with and manner. most they To innovative as job single but from to What some And problem. despite not-invented-here, is to industry have I no somebody in need a to the is, how business from done of as with with what XX and that our a drive the huge the an to right the does spend guided areas what Jim have where R&D of pull invent pile Just yet. across struggled Lockheed Jim a we're the technology, don't good openness strategy going may these allowed job gyms I stressing to technology technologies, the to agnostic in identify see on best whoever and possible. think entire I and of starting where good external our culture a step but we been the partner get view art in for personally of and direction. that it's And in doing we're team demand solution We're engineering the has mindset, pretty in some and to of investment the getting community. which fund, to startups, with is

haven't internal I a and from So appreciate change an direction I the perspective. seen

Operator

gentlemen, we ahead. question, press reminder, please this ladies if a next And Walton go of Instructions] will just to and a with you time. Please quick do Myles [Operator And line have at the go UBS.

Myles Walton

Thanks.

something. clarify markets to I the in cascade XX John -- think particular. certainly I at the want just looking And

that prior operationally of you X.X, the billion? you billion prior zero, planned hadn't it's included X.X supplier advances are suggesting the net guidance mentioned you the from -- forma the pro and words, from towards move that are X.X So on, so now the guidance in those and is other

John Mollard

Yes.

Myles Walton

then So billion? X.X it's XX,

John Mollard

prior Let guide and me make sure we're [Indiscernible] tracked, and the was X.

Myles Walton

Yeah.

John Mollard

Today, [Indiscernible] not we're is billion-and-a-half that in and a [Indiscernible], was there. that doing

is [Indiscernible] XXXX. higher $XXX dollars we're that higher in Depending than So million to $XXX from accelerate -- million on will today, a much XXXX, be to still million. be are up be number we or have higher you, our can going telling billion [Indiscernible] $XXX in I'm higher. how anywhere higher to

could outcome were if the equal to years, where 'XX, on punch 'XX about slightly multiyear you or behind dependent 'XX the ahead, So the be that line the sense. and either COVID if is 'XX and makes or is think two prior of we guidance

Myles Walton

that rotate does, question these presumably I you. It back is but guess advances the to are

So about I'm beyond. and 'XX asking, Would [inaudible why be XX:XX:XX] that's

James Taiclet

go because is through don't billion the benefit you year. a if a roll-off, you full get -- will, you as of rolling So X.X the quarter-to-quarter this a

when of a will two be elevate or music is some chain. we that saying. flow report cash the the there's the didn't of to as to typical supply we because able flow subset quarter we stops, throughs do - Depending So the John then

John Mollard

Right.

James Taiclet

whole year. going be the That's to

John Mollard

Yes.

a XX, use dollars baseline to the XXX% The $X.X If a XXXX. guidance and Today, XX, XX, same XX, we've sure XX. at old assumed baseline. just make on that's as Just billion. of we're XX XX, got at of we're was over the let's advances down billion end

three-year of assumed we could turn in costs some say amount that there's high we funding with - need align here from anticipating will and $XXX that we're an a today driven of development that aren't terms history, shift where what but a we these in profiles ons that of authorization million based be carrying going with now on were that of to the you associated programs do have of customer a dates. production, to transition. sitting is internal funding likelihood spending are substantial term. contract on we some period over we So -- advance down It's I've are by notionally,

Myles Walton

Thanks. one. to stick I'll

Operator

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

Cai Von Rumohr

very you Yes. Thank much.

I'm the a little Jim, with capital confused deployment. So.

IRND, terms to incremental going an the talk in less of have increase recovery. You you're dividend, about you spending amount CAS

stock net for you debt AJRD, EBITDA billion of balance do a a X.X are you sheet this sheet. talked of any you repurchase. You you up to living a stock repurchase What over ratio kind do if can't looking really unless But balance period? of

John Mollard

take Cai, it's that. John, I'll Hey,

cash you years the plan. first net operating retirements our the or -- free If flow the I'll and cash stick at flow look three of debt to over

the my expectation to enough our us account, still I entire But AJRD, finance know X.X. billion have X.X. are rates in I $X used XXX% original with been the the point business, on other to was, and absolutely bank were financing I'm Our this. of given call that's about have excess and what earning billion The we otherwise allow X.X acquisitions liquidity do would now leaning XX way X financing cash are, just balances especially about the run billion. towards, basis it so low the set the think points. violent a acquisition. of deploying maybe in kind for would cash I X.X That's and Jim X.X $X talking is we're broadly, probably agreement billion how and more

fit, and M&A mean, fit, find If the right right you operational the M&A strategic the culture has for can free. that fit, right it's itself. pays I

get quickly. good back money going very some your but if it's have upfront to deal, to You you're finance a

a Sheet. view not So Jim on M&A drain like I your is Balance does,

Our know, Balance Sheet, as A. you is single

would support having minus A. line been minus metrics to A do rating. was The justify in minus hard the a a higher We're the instead Conversations Our scale. I've use in about discipline that got talked allocation and dynamic says, to why a need there for here, we flat A we're punch have the capital two of process additional we've tremendous do is a We're firepower. to or wherever. going the as If of amount to resources ability it's Jim put that.

James Taiclet

to prepared we've remarks tremendous emphasize and we're I value really Sheet we -- a got leverage tried share at got And levels. a the upside. pricing Balance in perspective, from see strong these we've mean, repurchase in that

can I and ratio, and a do it smartest do believe, and so. go leverage Everything manage we'll maintain resources reasonable to the it credit will we to also we all. go. get John you believe all can point time, as also, the that make the the allocation We we I at capital leverage said, to in capital strong markets and And a rating.

Operator

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

Noah Poponak

Hello, everyone.

John Mollard

Hello.

Noah Poponak

at and years what takes. up trying much the you point assuming was that there putting just was was is what's low-single-digit that's revenue a MFC, assuming puts understand I'm saying assume to you're at doing, shortfall good programs. capital multiple know market doing, you are there market end do you still growth What about then the versus assuming the the was Jim, Lockheed worse And one rate you're to AWE, the few growth are projection how saying is, growth. outlays? flat versus sustainable, was where really what than authorizations MFC, guess being of and guess outlays -- aside, I because that specifically supply of talked are happened are specifically Company I you're I you XX looking for But outlays better growth high, And constraint.

that and changed it's down amount. you're Now it's quarter down so have a to in year, decent seems the saying next

John Mollard

on It's John. exposure the lot characterize take have a in I I'll rate. on some us a need to X% maybe in lot year had we although for headwinds the perform would to 'XX 'XX of able that's exposure see to question. year our regards, Afghanistan, as was a I President's path prevail that, the upside and 'XX that of or fiscal to center companies I but being unique we're competitions, government need on as President's have to think example. see to if confined X%. that a They the growth similar may A rate our the the But if in the maybe point. and when budget. 'XX, say to track than looked we the to the headwinds out. and see at do for schedules, 'XX I We I'd grow airplanes committed last are programs, us to though, I Again, Budget, helicopters 'XX, 'XX out-year deliver growth to growth, headwinds. I us, faster for

James Taiclet

MFC couple know. again, and production another UK program we and known is and In capacity up more going go armored as going that to a puts the then to up program $XXX XXX little million investing program the in PAC-X and a canceled but one logistics much, MFC, the ops off no go for into not a was in takes all do not is warrior and XXX if [Indiscernible]. as well the bit for And now probably in we've And that million itself by cancellation year-over-year specifically, that government was had support just that tailing takes is 'XX, But vehicle and been there's then you the but growth another was then significant special million. PAC-X it's MFC you too rates. production away that that UK downdraft.

have those decisions expect that then may time, 'XX we way see of at the of we've by 'XX, point. some XXXX, plus, effects all be But understand really we beyond there's areas each and in starts or assume upside. then. XXXX really that 'XX, to programmatic we'll on and are those that will better effects to focusing some got going why in details are four you competition And these to have to dig be speak, if that new where material on the big we stay So happening. because known too. VA those so know We'll

and we're going to next for. an work weather And period way, goal. post shareholders by growth growth Lockheed point specifically along count to in through the with positioning share there's That's couple rewards share then be think of the it. -- lower and the factor at share puts And but it ourselves our Martin that I inclination and So to some our materially, then takes count get this we're strategy lower an is really end of a has is to financial a the XXXX. aiming that's count, years, overall inflection what

Operator

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

Sheila Kahyaoglu

guys. you including morning, And me. for thank Good

John Mollard

Sheila. Thanks,

Sheila Kahyaoglu

on is and upside mentioned that's of that shorter surprise? could PAC-X. or What X.X like talk what You what of XXXX, up we on element the billion investors Noah to follow programs the and on. think focused could Is elements If do to CH-XXK 's just the Maybe term, come in? because other are I focused would about XXXX portfolio potential there're we question. guys growing that look be

John Mollard

Sheila. Thanks, Yes.

of to year that from the operational that, in into going in production. right about ties testing, In last those going you're its A if with from transition that's while growth achieve you kind some now migrate XXXX acumen how still down to our articulated. come going to into start extended between look categories years Myles, are the opportunities potential assuming three the the has big at development test to production you they guide. to programs yield, that probably you of that and lot XXXX overlap upside able to and across four programs is an seeing where through period the you where think out success I Jim are bulge they're and discussion have slightly

hypersonics, million to I going to we're out programs going from we're In schedule, and XXXX. 'XX were growth the growing going routes, delivering XXXX XXX going think to in But carry no to going record. them. going programs mentioned absolutely financial backstop I to in maintain there 'XX their mean, we're 'XX. are XXX Jim against come going of be to a successful, PAC-X XXX we're is classified growth so in doubt XXX and need critical the those million is to to deliver bridge be to

Vertical growth PAC-X an time you is levering. really well. in -- going we Lift that strong be Program, point So Future very and of see And when if CH-XXK period the will starts as inflection we to on prevail

Sheila Kahyaoglu

Thank Okay. John. you,

John Mollard

Sheila. You're welcome

Operator

ahead. Next, to Bernstein. Please go Doug we'll go with Harned

Douglas Harned

X I been are that thinking is we've to to think term, that the it may talking F-XX extrapolate taking systems I -- the today, a that best to really as what capabilities talked going long software, also, domains, a X challenges, issues big an you're talk which platform of do related. you about and go situation past, the important I when to of in long-term of forward? I risks hoped So sensors, both systems, Good of and JADCX been think not way rates is of measure, tech Tech that things morning. that pose two F-XX In confident that look by move any Thank you. integration to lot and get gone forth, the where about if across the has I'm about as I then the think, at you to be, strategy doing stands But deliver cams, have it's and you and wanted much and is combination F-XX about about But the integration. today, I about processing, the think has is may X hoped. one more so integration Refresh it's program, on where there Can for broader refresh if and how architectures block are that? strategy. to

James Taiclet

Jim. Douglas, it's Sure,

this TR-X, for storage cockpit Similar All a -- a with an which airplane, important just and the things more more airplane. microcosm start better display, one jets. at the a a good gives I'll picture. But TR-X ones, larger least. gives the of you in in supply It warcraft. Century data So you processing and data XXst I for

not are that to they platforms. beginning closely jet journey essential into the systems and Although with more other networking other

Refresh So We've things We're working schedule some or a into now. engineers we're goal [Indiscernible]. to XX:XX:XX] from counting had got base parallel We're the how with try that That's flying equipment we that connectivity jet. with century But up issues demonstrating independent. also will add. it's But bit. architecture yes, will that we're on the chain a in, another of our be TR-X feel get doing going station to been networking is significant for Because already in capabilities do our hybrid that we've to a supply to that storage the U-X F-XX aeronautics own warfare. processing and suppliers XXst with cornerstone data two to perform. it actually delayed to to of TR-X capabilities the platform to on we we're [inaudible our on deter those The data them. today take once and We provides leapfrog embed which important. not developing them us common has our the defer Tech really

So be are differential aren't directed coterminous. these coterminous, they or but related a things not

done, is there the contracts of customer jobs derived in and a is talked to our at protocols there Doug. platform-by-platform that roadmap and and of share. the we're industry in What and this which I open so and a been And be going architecture construct, of standards whole connectivity business think our and technology And things the by government months customers overarching technology that, a But working since been technology six set to broadest this -- XX that do JADCX time. mission. using to maybe these last developed senior be doing and to about I to with here, have won't kind. any be the talking this, it's going is will to far one you an can get time more capability has a by reality about that I will our customers provide and implementing mission want every be both by in roadmap think stage understanding We most this a roadmap program mission at is I what I level what we've is

of got We're and Now showing tying optimal and maps three that have integrated we getting first, should we and the months. connected XX be counterair, to we've got XX those in getting together feedback and those happened making, on those command sensors, missions technologies effectors X-XX and way which the what platforms and control we've every road decision completed most systems, coincidentally actual missile surface missions, be defense. and warfare, air customers

associated, moving but we're for out fronts XXst on both out is, again, Century Front. moving So essential the [Indiscernible] Warfare on not

Greg Gardner

you, Thank John. Okay.

we've our got time, little conversation been there's today. think normal over a I but outstanding

Jim remarks. this over to I'll at time, think it some turn for closing I

James Taiclet

Greg. Sure,

our want call delivering reinforcing here. the long-term our to shareholders end to today, conclude I I by value to As commitment

X.X customers our do with and as advance leverage, our with and again, we're are so, about we and the talked we've going cash shy to way, out shy speed Balance flow using strong and about. billion just are of around way. work through numbers on to billion X They're our an not along be to gone of to hard missions are are Similarly, billion history, invest robust from X and not but incremental CapEx they scale While along about not Sheet clear X.X not Those to we're at moving incremental, they the XX:XX:XX] [inaudible that. up recent important incremental billion and

for to value all a We The with this look January. -- see We're lot. So next of going Thanks couple of just the for we're scale today. down speaking thanks discussing you hope by here. be the you amplified. inflection growth that approach doing we're our in That's be our sure ourselves inflection joining at to make a to years goal again for want repurchase growth I our road. to here. sure the knows forward positioning that at. on expect us looking earnings everybody a And call timeframe should we on And in share the valuation and for call of

Operator

gentlemen, Ladies that Thank your does conference for and you for participation. your today. conclude

now may You disconnect.

Lockheed Martin (LMT) 26 Oct 212021 Q3 Earnings call transcript