LMT - Earnings call transcript Q1 2022 | Lockheed Martin Corporation

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Operator

Good day, and welcome, everyone, to the Lockheed Martin First Quarter 2022 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 first everyone

Joining on today's Jay 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 fact 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 Malave, 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

Jim Taiclet

We're leader. his team. Good management our professional Many our organization. extremely team, everyone, joining to recognize an of his outstanding by career to he's working him. company. John exceptional today and and to our excited his and he's us be Greg. John our have and I'd earnings the two-decade-plus you of as call. know CFO. Jay We're begin in defense executive us industry also financial leadership for thank grateful for you treasury I'm have join key a be first with for member Thanks, leading to acumen, morning, On and on with contributions acting I'll XXXX aerospace today as Malave personal during financial him Mollard, Jay quarter continued welcoming with an our our and worked like a tremendous to Jay to pleased level,

to with results and Moving begin overview. in first financials. XXXX a I'll a our outlook detail moments, brief discuss few but will our in quarter Jay

below sales slightly first Our our quarter expectations. were

challenges, full our supply experience from expect the our to the committed reflect adverse these year we objectives XXXX I'm proud how responded short-term to all of that and We intact. However, chain, timing January and outlook. operations our Omicron remain in some but our out issues. did laid surge team delivering outlook in the remains we winter our these impacts variant to and we

last with free Our of our operational margins first delivering cash increased projections. from and profit performance was flow solid, was year's areas business ahead our quarter

agreement accelerated repurchase We also progressed our well during plan, $X cash executing a deployment the share quarter. billion on

to our over We inclusive to full look of achieving outlook we stockholders our course as year billion to are our on of deliver of XXX% cash well flow year repurchases free the dividends. $X way of the in over

cash free on growing to shift delivering dynamic to long-term per and strong continue flow returns our long-term shareholders. disciplined of capital execute and will strategy We share deployment, thereby to

the demand signed the billion Black Lockheed an the Canada's underscore few of XX to XX nearly and to well F-XX expectations announced XX previously as fighters. phase this this to $XX remains House four and increase for of that to that as is on bipartisan And provide quarter, Canada and that from bill additional international most partner support initial helicopters to provide DoD And for years, of requested into Congress This last by procurement has F-XXs increased enter of Canada in budgets, to and F-XX enable national defense. national next Hawks, Lockheed support legislation pleased these is German the as Turning aircraft, With lot backlog opportunity and XXX although over available the very the and on list billion submission Royal The decisions will four satellite us Joint F-XX additional the United FYXX to Air program, of in for we Switzerland additional potential also one the Martin similar the with highly unique announcements our the Martin capability U.S. was announced Germany award to the both year have strengthen followed fighter via of war the resulted will will aircraft. purchase bill competitive the the Martin Appropriations government the overall fiscal in stabilized it Canadian we're budget finalized. adds jets announcements countries increases funding we unfunded was and XX Canadian will programs. production fighter wins including States Finland. amount. survivable government to F-XXs, and their services subsequently missile value the Force. plane XX to in the to quantity look strong the CH-XXK The President's benefit fully process have its their Department Office Lockheed C-XXXJ and priority our F-XX Program in XXXX eight today year this original Act, defense. finalization President add connected with capable, as our FYXX of final best XX improved below Germany established. profile with our when jet deliver Omnibus the F-XX intent partner for franchise spending, into Biden. to respect Senate, recent to are the of procure The our program. transport X in the law increases Defense government had and as the aircraft, passed expect recently platform this multiple production approximately process, capacity these well all All over enacted unrivaled programs we some $XXX

submission portfolio initiatives funding. focuses the elements XXXX FYXX continues submission few administration's hypersonics. expanded innovative forward billion development and This it also our fiscal technology our in budget initial FYXX these the security such an the Vertical DoD nation’s Also as growth strategy, Department look in in our providing multi-pillar President our with for to first solutions enacted aligned important key and The our customers $XXX year our take are record to the and requested appropriations date new added President’s request, on XXst the strengthening emphasis efforts other budget Future to a billion on all related budget well quarter, also we Defense totaled business important growth DoD and programs Ukraine additional up The process. Lift the $XX investments in Indo-Pacific the and on missions. and submitted and deterrence with opportunities. the step four region, of long-term to moments I'd capabilities, with Century you bring supports that note, of our to On strategy, pillars two like a This in

program growth aircraft, the for These this full continues years. orders production rate well production, performing Israel team for main for and lot record, long as in of deliveries The very in for record time as tripling low-rate inflection the to we lead items pillar. awards X is programs received initial of CH-XXK announcements program next billion $X of to one platform, contributors helicopters. the full as Sikorsky anticipate included to lot X over in X including XX well our our quarter, As it our production few

across record. Space opportunities award business look competitive domains be three mesh to JADO The this operations. joint and of build a a to highly final available, believe mission X, outstanding Space built our activity, our the Architecture. will team Aviation to continue XX maturity Agency. new new layer Annual area, Several this in Palm prototype next-generation to long-range forces. are low-earth the provide Development to Beach our $XXX unparalleled the soldiers development aircraft initial into also constellation small significant mission-capable of one Beginning the X DEFIANT satellites space we're proposal a Army capabilities and and vehicles to National program one platforms solution the and delivered was response platform of year, environment continuing our award prime be from future the Association rotorcraft. connect to displayed contract support an most Sikorsky country's see armed assault Tranche maturing example ago, as other this awarded business nautical technology, assets at capabilities that Nashville excited to to flew weeks This their of aircraft the with That the demonstrated with very West landscape. updated with completing the later agreements on tranche architecture. tranche SDA part network miles maneuverability, million Conference. layer DEFIANT to our in We offer that forward will transport of This transport we and from orbit and excited support Army space of design the solicitation. deliver space in X-hour competitive XXX We XX of our will offering transformational further current our we in the of our capable enabled our for is XG.MIL and America unique our in it's with Continuing And all-domain space of that March, U.S. remarkable business we Defense

my the government's call Ukraine. to unprovoked Before to to has resulted for moment like express conflict the and European for to people invasion sympathy I Ukrainian by threats hand impact the devastating affected in take those continent. Jay, of security Russian heightened the I'd over The a sincere

aid that to resultant Polish is steps is in USO Martin crisis to others to we hope support address HOPE, to we and turn relief questions. continue multiple Cross, humanitarian peacefully partners. later join you will resolved provide efforts These to refugees, the and answer and your While include Eastern help to taking over the the assistance committing to With Project conflict Europe. soon, Red call that, I'll Jay this ongoing through Lockheed

Jay Malave

business and you, our on to employees team results, morning, our detail the everyone. and our represent I Thank it's discuss XXXX XXX,XXX Jim, first you an of earnings honor introduction, the good Today, and through area outlook. call. part walk quarter and Lockheed consolidated will the appreciate I Martin be

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

quarter begin Let's our overview and results. of chart first an X consolidated with

As results impacted program reported earnings in quarter expectations by as first were largely in our life our with was release, the transitions. cycle line

to points mostly Total QX. segment segment to in Earnings COVID to operating share effects, saw and due margin delivered addition early was expanded billion XX to operating expected the basis billion, we of sales timing, impacts $X.X also we flow. profit In free XX.X%. and program some spike in $X.X per $X.XX, were the cash

allocation quarter X also to share. cash shares returned our start of billion $X $XXX greater got in dividends our Along remain a flow full average $XXX an than off We in at price to we stockholders. year's strong of program, committed to per million almost this capital approximately And year with repurchased with paid, free the to times we outlook.

operating points and the results Turning with associated coming X%, Total sales delays, with reflecting X.X reductions, from segment about recent primarily chart operations profit chain to supply mostly X. by and declined internal surge. anticipated consolidated program on COVID sales

course net to performance and be this X% versus and XX our last operating latest and we profit underlying operations a did XXXX. recovered XX.X%, last year, job strong basis of managing profit reflecting to the impacts these teams expect supply challenge, points spite Segment segment in over lower adjustments operating solid expanded margins declined versus year. chain of timing of Our

and quarter Weapons Rotary by Systems to by well of of last Australian Mission timing. sales Turning pilot the lower, and business cycle impacts. timing chart air integrated year's of delivery approximately missile production in lower were Atomic on Control tactical quarter X. from COVID-related following troop driven due for Aeronautics approximately as chain the areas and ops to was Missiles declined delays Establishment life as training flat was the also sales F-XX expected, missile and this withdrawal first by and transitions segment Fire an million to on special supply in program reduced sustainment increased And system F-XX. mission business. the other from million the in $XXX due $XXX Space expected affected lower Afghanistan, program volume Three transitions revenue offsetting defense, program nationalization program. our as four with and strike program

primarily ULA Moving increase to on program earnings, space profit successful equity profit aero program. quarter. due adjustment, with the an by from margins X. higher solid across they to performance margins solid the MFC contract in or segment met Overall, net driven operating contracted, chart our and negotiations operations. but and additional expectations and space expansion and the exceeded lower international performance for RMS on at Operating were Both MFC

to earnings on X. share per Turning chart

as strong Shifting and in Our and mark-to-market stockholders deployment volume, approximately authorization operating billion first billion nearly quarter by the declined benefits quarter we quarter tax Free as partially and offset lower outlook drive cash deployment expectations, reflected of of XXXX. chart FAS/CAS through existing quarter. generation free cash a grow Combined returned our of over to $X looks shareholders billion and and reduced rate. to dividends with $X.X of paid, through leaving repurchases, XXXX. first income, business solid increased adjustments for flow EPS returned cash count our free for the quarter-over-quarter generated fourth $X.X rest share lower following on segment impact X% decreased we billion remains XXXX. of Cash sales flow this $X during cash share $X.XX the of X. of $XXX continued from by of ahead cash XXX% the value very to to the million was Operational margin, on flow our the

Okay.

XXXX have confident our variant the improvements over outlook as We X. Moving spike. remain outlook full to year since in chart on Omicron our seen we

volume, a expect which sales to and this day below throughout XXXX. first expectations, fully than be approximately less Our recouped we million to of quarter single were $XXX our equates

billion project For second sales $XX in the quarter. fourth we slightly $XX the year, in billion of the of balance billion around in the $XX the quarter below quarter, third and

currently As outlook our and pension our XX, out or does liability are any On chart our and under outlook. break actions release not segment that transfer evaluation. debt impacts include potential operating refinance profit we stated, sales from

consistent and January, note to Our to that segment guidance we all continue our consolidated the aero quarter, the quarter. our for here growth in a timing of estimates areas. this in to business XX results on with provided likely as agreement important funding constraints anticipate outlooks remain for through cause XXXX are dependent reaching second long-term we lots would F-XX impact our and XX four It's upon financial beginning

on both Program in Our with Office striving to teams term. this achieve to and are critical near are Joint milestone counterparts working negotiations the closure diligently their parties finish

year So, we projections. full remain confident in our

To bring it all chart Okay. on XX. together

in The COVID first recent in delivered quarter was the spite that the solid operational largely of of performance line with spikes. our expectations effects

Our cash deployment and got investment strategic growth the for to off allocation year. our with outlook also a capital good start on generation fulfilling for focus and a

strategy four-pillar deliver our positioned to long-term and performance solid growth Our value. us have shareholder well

call So for with let's up John, the that, Q&A. open

Operator

to ahead. line [Operator with Instructions] go we Please And of go first, Research. Spingarn Rob Melius

Rob Spingarn

Well, good morning, see good Jim you and again. to Jay. It's

Jay Malave

you have to great the It's industry back. Rob. you, Welcome covering again. and Company Thank the

Rob Spingarn

discuss comments bit expand more. I Europe for could you we your I potential in can and the if a Eastern detail Jim, perhaps more it's on early, And but impact know ask we Lockheed. earlier you. Thank to discuss wanted little

that incremental So, allied longer-range for talking to Ukraine, for the domestically about at both but F-XX demand of start, also and the the other for is and U.S. I'm MFC, products F-XX, nations. thinking weapons now

we do organic say, And level, of time, specifics, rest of five relevant? So, are next products in growth how over think the a higher at line top decade? influencing this years, most terms what about the

Jim Taiclet

Sure, Rob.

And a a with invasion the an alliance, power facing the Let by clearly instrument given by the A to territory the as of result, major as strong of world's force. of deterrents take middle think start geopolitical global since strategy as century. The and me a what XXth foundations to great company has nation's we border international Russia's an Ukraine. value of not as and recognized a just changed the country circumstances. war articulating crossed has been we're of

positioning talk open deterrence enhance so. other the continually deterrent But our and we a aggressively technologies an pathfinders, new as F-XX really been about go our digital Century the an a our but it's months I our And Martin, XX XXst company. in have to deterrents a about architecture a the of enhance enterprise. strategy parallel. as we not Allied have as with platforms years and Defense using XX we're and core X strategy I'll platforms national minute. do doing every mean, Using couple platforms effect to So, while to to Lockheed its -- in we're forward, platform, here and every we're integrated aggressively the at company of to integrated X ability new developing

technology Martin, we're its able this together be integrating to defense digital to this closely and talent toward ultimately, the deliver Lockheed a computing, and can across U.S. AI, across as are and aerospace investing own strategy they cloud time the our a accelerate and Century So, lot work also across et technologies areas and XXst others so in business cetera. and over idea allies, of industry industry XG, that We're our well, so can and company those we like integrating as on vision. commercial distributed more to, effectively time

what and a So, and industry. total about pathfinder maybe for as deliver can the as our a it's more company we in strategy

environment. this strategy. the government interactions senior U.S. and commanders or combat to where F-XX the The My speak, either getting really defense combat ability of feedback you unmatched some core and aircraft is the feedback The Europe, with example, node to including you capability support fit survivable control equally in Israel, stealth F-XX in fifth-generation off on exciting the well of hostile national mentioned and the so the So, a in of wider used and node core in from the platforms has as people and the pilots a F-XX, be really operations. or an been deterrence. officials in is into a much aircraft, front, led sensor with. and countries, been for to especially and command be with But I’ve network its a is

that And so, we'll it's data it's F-XX, fighter the combined -- It's perspective have aircraft. storage capability greatest aspects XG.MIL the bigger even sensing capacity of kind of and got to we any that data network as and also any XG.MIL. largest suite its but processing got of platforms. of is aircraft control store best command and and the capacity we on the back into it's And other by a board the of got with know mean of. got sensor connectivity essence fighter the really the And what

as the with has platform, a moving as Europe. for Germany, F-XX is one NORAD see, important in mission, another well. already of beyond from toward to for part post even the I and they’re well services the I'd F-XX as course, And are with more we unfortunately. enhanced say in President's integration, that direction and will the asking Asia, the expect again, Europe -- So, of Canada and that selection, you airplanes more responsibilities its become request Ukraine, guess, Also, and be there in F-XX, nuclear both seemingly with

strategy has capabilities Chief been as all those F-XX the Air Force future quarterback the of Brown because So, the U.S. about. talked I called of by

has well fits integrated parcel that's the that team. and so is which in Secretary part his to the strategy, kind speak, developing deterrents, been with pinnacle, same of of and and with really it our actually So, really, Austin lead really concept

proven the F-XX. marry mentioned you our greater and effectors system. and we F-XX. us as are with about, great in It's into XX a we and XG.MIL precision can and other you that going take the long-range probably an PAC-X with them board on X.X THAAD generation aircraft affordable earlier that allies You And up to get XX more the talked you weapons to strike avionics through move weapons defensive long-range integrate -- then, time. so like airplane It's like be way demand a them an affordable and when our Block

platforms we environment So, But attempt can meant in you all of in to But the you it's we that as we're update Martin, quarter not we'll I and defense But out-year trends strategy going where that the quantify outlined country as strategy going. right also for right preserve to period. early on growth really in alliance. Lockheed defend this every those I Rob, to we leadership ensure against enhance are say, update to Martin's current future But Lockheed aerospace the think in is see what's the of that. a and forward, to in the and our proceed industry. the what we'll and position on that the it's are yet trends these revenue to the too expectations set is

Operator

Next, with ahead. we'll go Please to Jefferies. Sheila Kahyaoglu go

Sheila Kahyaoglu

units going maybe XX, does with talk is F-XX fiscal XXX about how up? we then, we international that we the we think when about do overall? request can And what So, how And think more, about about what's the exactly orders the of some think 'XX when hold on production? being negotiations, feathered produced in to relate

Jim Taiclet

clear ongoing last during in we that direction of the is and this cost aircraft the over been are of past or the But two have Sheila, to biggest negotiations the I'll reach negotiation. very have on so with the some the cost are Jay us inflation including maybe in what's our XX U.S. off couple of But that that stakeholders, shareholders, ability understanding the to over confident actually our and to changes the of drivers months in detail. our that a we're ongoing. our Office all government of more important it's really it in Joint the turn start and shared COVID the of and Jim. And Program environment have agreement an years. for effects occurred upward over for

with quantities see But U.S. on successful initially earlier, those, what lot partners There's everyone also, projected all there's need We're can in XX if number make those to costs for to that agreement XX. is important what a there's on so, sure the and a number. in very that international now, the also were we -- for lower working we magnitude very, lot. to bolster that and to joint those as of that so the right we're that with our a are government consideration, And working take negotiations. lower have costs program some touched feel into we ways it's and

you So, all it's things or us our get make when those for add the well. for government shareholders to as together, transaction upon for U.S. agreement appropriate an our and workforce and we incumbent sure

-- wouldn't there reality So, call collect just then work say from we're baseline closely that's what the the I on government it working cost customers a holdup. the that's situation, constructively that contract. I our on the and and with and to we'll would of to

Jay Malave

a just me Jim, bit. let add on little

far been we're that. has the Sheila, encouraged There and by being negotiation, progress, progress as encouraged we're the by As made.

assuming Jim if some we that As in to be endure the a $XXX the impacts it's to balance quarter, term. have right recover be been to to stakeholders, as a means of alluded There with Jim year, working would the The which to of far negotiation. mentioned, even again, the really important does could our urgency plus as we negotiation. we successful And agreement remain this for timing keep it complete reach in an we'd has million acute the that. gap, need mind a impact, in sense short to that and expect team in that

profile. mean, delivery confident XXX before the a plan laid question. I we're out had production we the from in As that pretty far as three-year

shore mentioned the level you customers provide and customers Jim international schedule. that remarks, really mentioned, some his prepared these in up to just of flexibility that As production

may to was list Marines, You the Air priority have and XX the for Force, aircraft added about in Navy seen there the the that. unfunded

the mix with three-year So, period. feel ability that in comfortable international in cycle maintain our demand, we production to that over you XXX when very a

Operator

next question ahead. of Ron Epstein with Please Bank America. is from Our go

Ron Epstein

all if your you mean, minuses rotor the for curious the I'm got of could to of going I'm view, you that investment is that lay seems community, get for this I with don't walk Textron a And why got is Lift. on Vertical helicopters, that you just mean defiance the and the to like think like and you And point counter-rotating you've get layout valor? of win do through case? pluses In tilt there's and this here that out from the what I it call, Future over assumption. vice us don't versa? going

Jim Taiclet

Jim. off prior I'm an and Force like rooftop up into is hot quarters, helicopters, seen been experienced to in that. can as Aviator, pretty into and things a -- that get aircraft this not crowded an add most would in start special I helicopters a And maybe ex can environment, partner my I've S-XX, in onto he’d like. fly a tech Stratford. a flown in to the which I've our to into Matrix hand, zone urban let's is time maneuverability people What's Ron, because as ability Air landing it's zones ops close a I fly, say, important in a the landing Jay demonstrator surrounded if but trees fighter to myself, base pilot, and close you to I've by to max involved -- I've some head it knots, and you life long ago. when the probably X go the the point. the is XXX this live about differentiator. to I and get then that's aircraft, well, And that Getting got that. to rotor the survive through over And the if aircraft war above need is and flight, We've shoulders to versus of could target, the maneuverability That minutes to not going is X believe, the dual be, our faster XXX cruise. question technology a advantage, There's speed speed sort you horizontal ever the that what mission? And would anything differential. is at you the upside tilt up will, from miles target, irrelevant do of you are second with that rotor. have

and it's one future the add? Jay, Boeing. of decision, make can fighters is to war and Sikorsky they commanders making vertical if this only else think I anything out

Jay Malave

well No, I said. that think was

I it. think that's

Operator

go with we'll to Rich Seaport Please Next, Safran Research Partners. go ahead.

Rich Safran

in the from for above front FYXX you I says believe comment your you get request I what expectations have this, 'XX. on recognize the I prior don't and request want XXXX out So, but to for when was cash in out government that $X.X about you assumptions year your on thought as to year you the gave it ops of next stands, billion estimate. and this used might the growth just

the they as that alter requested your if request you're ops cash thinking is. and from how we just So, enacted is -- XXXX Does guide? if if a take that about standpoint growth

Jay Malave

that question first. was budget take me beneficial. The Let

I reference and a future emphasis think like it directionally, the a to the seen single-digit Next-Gen expect excited communications maybe again, command vehicle others. to quite our Interceptor, few -- little it's all nuclear baseline from integrated we And incremental things as are moving recapitalizations, programmatic things reentry color trends systems, of in be a control in about Next-Gen deterrents there's and and domain previously that be the right had lot mentioned, interoperability. reentry And low on TACAMO from would standpoint And to provided. Jim bit way. you you've a favorable, of OPIR

I mentioned, as directionally, good. feels so, pretty it And

going through an through As exactly mentioned, we're us and that this, work still some we're analysis. It's going take impact. had to Jim from compiling what means time to the

extent to which to upside, and fair it's they'll time, appropriate what really you work It's through at let we'll have that the to the beneficial. is. that know the think it's to I say biased

Operator

with Liwag Stanley. Kristine from go is question ahead. Morgan next Please Our

Kristine Liwag

regards $XXX provide Maybe has I our billion for nearest meaningful that up you of as defense, opportunities should Ukraine. a of following how we to be armed you? addition for on can and in understand Rob's question, F-XX, should And too Germany the terms more color forces. there mean, opportunities modernization step And missile this long-term I that watch with is it's term But, in announced missile you? give up earlier to defense? its to outlook early in allies for spending for opportunity

Jim Taiclet

book House of Martin we're Armed revenue a long-cycle for here program. Committee, And months -- authorization Kristine, this Lockheed depending at from years, of be to booking XX Jim. on to obviously, revenue in is So Services X in example, the could business an the

items billion But those for I national to how we a That national suggests more -- challenging example. order to of global and and was XX well from positioned our deterrence get it's need that's feel than we been, last we're defense at least do security actual in with product that to more quantify and in I So, out, lay the as exactly all is long than a valuable specifics that revenue $XX global and security -- it going And years, contracting. XXX a we tried on strategy for ever have time environment get is really to security think until before. to the the schedules security the that and can't security. lead our contracts touch base, yet meet funding nuances we that and perspective

we we in want are that upon to our bracket company, And going my did reliable of last So, forecast. a year can a be, give I time. we're we at because those it that's the you not too, because real have what a fidelity where to to data we keep try growth give guidance process. which numbers going to

Jay Malave

add, that scenario to and just to point, conversations we'll our as are and I'll Yes. like And sensitivity provide that. with government up, Kristine, customer, those clearer firm Jim's ongoing planning you. information analysis, there things

Operator

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

Cai von Rumohr

the So, could return negotiation. if contract we F-XX to

to delays three what, because million to of software, understand working been subcontractor the mentioned this. you've quarters for, through government trying major with that an is negotiate hit kind of you the still your LHX issue. I at this and $XX is So, took COVID, that COVID a related

basically, the an assume likely guess, you the the second question I agreement to agreement. will incremental an But reach this I is, hit? in a will And what's reach don't secondly, quarter, if be? you So, impact result profit in

Jay Malave

And a point, again, on any Kai, it's dynamic discussion, so our but type at wouldn't currently this expect not of negotiation we expect stands. type would any as charge there. hit of profit based it we

the up second $XXX quarter. will here, impact as I obviously, million in forward, extent, would go up. Going plus To mentioned be that the further

see we things accordingly in update I have think revisit are quarter progressing. I think to we'll probably the then. that can And how later to

and road, We're a think pleased really encouraged just get made. long know I to let's significant progress progress I the the that's been it's of but through date. there's some been quarter. with kind making been we're

And so, we're relatively this a able that in in time. of encouraged close to If not, that we accordingly at be can short time. update period then we'll you point

Jim Taiclet

next underlying in during negotiation three the bidding it Yes. lots. those And for -- the the concurrent. again, was significant factors period, cost And had of changes remember, we've

to end at been baseline that we've number we to have been time, this but we cost going going and a that's on has up. that yes, of think both for during quarters, moving So, because where it's agree

of is our was present to going estimates recent And vet the assumptions. impacts impacts see and what government. are follow. COVID to to We've speak. cited more which have got to that go those cost to those the the supply all inflation, way the to what the be, and And so a back basis phenomenon, then They even so, chain, that's negotiation to

this because normal underlying been most the been shifting go assumptions than longer into important that So, negotiation. has on the ground the has

are We information well provides contract. margin data strategy, basis as of actual constructive, the progressing fair is a our attractive which and and cost and they to negotiations as our that return stay on government shareholders which with are, going a

Operator

Morgan. Next, we'll go to with Seth ahead. Please Seifman go JP

Seth Seifman

about you deployment being about mentioned I of think bit capital to ask kind the wanted plan to I little talk but overall guidance, buyback deployment. or you And prior similar capital dynamic. a

so, share changed. And the price has

or debt do I repayment. think, pension with items some the having Jay, you to potential mentioned

months all? things three and of could if ago, you're about about you changed at thinking has maybe dynamic how how differently talk that aspect versus So, the

Jim Taiclet

bolstered theory have for or or And it I on prior of for here and for It are in this tend we investment? based million and with my my continues when of we markets. dollar order real got of And John's experience from winning from practice. the turn investment well good investments or of quarter can been Lockheed to given we that can now with a the on other dollars $XXX best out. to the start that data invest contracts they customers, on have we're The prospects that on how decisions, Martin make CapEx the because And highest and that to kind I are as by every in highest ROIC that a have the the the regression theory we've what's budget should contracts we production into capital the both, me and batting capital created borrowing plans is expect be going that over actual experience, companies in. which tends Jay's leadership based and is we've Jay for use at ROICs. company given best to our under or could anticipated some what’s turn deployment capital need

running frankly. really got The fantastic internal other and stepped major done team. our a good is the it. is great program we've thing right in we get CIO spending expect now, to up got and transformation really would I our We've from say returns a on digital which She's leads

We have plan. well-thought-out a

competitive to quality it's efficient, coming our Board a And us going more and our We this do on to go multiyear out higher more of have plants. support make products from basis.

the -- are area. So that's first those

tends speak. ROIC to highest Our so in to be universe,

making both, technologies the And most the some other right? think I U.S. in and U.S. looking inorganic those be the have we're area of So, at really are and in is traction. going to in be U.S. and to found again, Second be we investments, outside beneficial will will some duration programs investments hard now, and countries

past more tends down think we those to to boots putting, ROIs we say, administration. it, third let's be what's than current on and right open I us with ground a in -- it be really brick-and-mortar That little you'll expect now countries to our the see and doesn't other the be comes left, in wide the investing because by call on M&A have to order. pretty compelling. batting seem the industry the in When

look we to maybe already year. performance seen ROICs ahead get And as bigger to level, then the back repurchases, lever those talk than up can high what going the batting we've we're and And as step capital, far flow this how are that to even value continue at and else do that if to next we we're go our thought. Jay intrinsic if capital leverage let and you've So, it's to cash we in I'll work, order. us what buy in. and But a about and got up excess we'll thing announcements share put the reasonable going opportunities And we generate we weave shares. and and we to with can borrow

Jay Malave

-- Seth, would on just add the of me in plan just clarify, me be Let debt. just we don't We let refinancing delevering. It terms what have.

cash have it tranches multi we doesn't and and The -- change efficiently. all. years various in capacity wouldn't doing at existing just the change so, And here It's taking use the either. multiple really refinancing of that potentially

the capital, just I our as far wholeheartedly with what prioritization out. As agree of laid Jim

process. now. months Keep in through going go I've so, And evaluation the that we're to X.X mind, about been Company with

go can just decisions. and to this little analytically for time make just us bit so would a best ask I deliberately so, for through that we And of process the

right through on going that in would stock up look I we're an that our industry But from asked, just at look Based a of industry, you really what our growth valuations from a And in undervalued remains we're relative the the whole another questions in taking some for you determining value, still we've value If on whole. outlook analysis a basis. uptick -- the at seen an as now. the say, company. comes intrinsic

flow to then a that's we've to best sustainable our plenty that. of make get won't to key to going and is share, and flexibility cash in got from We're here we to decisions per do is want of what opportunity, that be is. we be it and The it. plenty going So, the Ultimately, deliberate free go about afraid capital deployment. we're use and what through growth objective

Operator

with Barclays. we'll ahead. to Please go Strauss go Next, David

David Strauss

So, I about wanted this, to outlook follow thinking beyond growth the up on 'XX.

$XXX that budget the talked billion fiscal modernization in previously, place on with and and in when billion. I bit had F-XX hold think you that It with billion plan growth. was sounds kind in you 'XX, said X% we $XXX can revenue got of in of that 'XX $XXX about there like was little $XXX based billion think you So, acceleration a X% beyond growth

XXXX can So I is and could that looking worse from that at be X%? all about mean, you -- how you acceleration outlook? much we got beyond beyond that standpoint as beyond anything above quantify think at fiscal program potential there And a

Jay Malave

the David. for Thanks question,

in comments, Let me it business. little put remind Jim's are maybe bit you, we just and long-cycle context, of a in a

a standpoint -- years. benefits And example get best themselves the in plus-ups. the budget particular multiple delivered manifest So, that from give XXXX can is I you may revenue over and a you year see

and If delivery impacts about in to a you the little plus-ups given -- points profile But the stream any going to look at year. is X is of the profile X revenue that over be was bit the us, growth over that X of reality years. to

so, going spread And over. it's be

increments in in of the to periods. and opportunity what an this mean out in We inning dropped, us have a to understanding presidential better need get had just terms we these what -- as so, here. the to we're and see And play budget first process let program

a And need it's some really little right just going before, go really And we'll mentioned to through as to that. to I make keep you so, appropriate calls now. those updated but the time obviously we're just early at time,

Operator

go Arment to go Baird. Peter we'll with ahead. Next, Please

Peter Arment

and Jim, year, awards. that, of us that you could that focused bigger always kind the around of appreciated? any be ones of a this list into would the maybe some just you a long international Hey. remind timing of international have coming is on Maybe terms Thanks. Lockheed you in pursuits of potential

Jim Taiclet

you've on the we've success F-XX. lot a seen, Well, got, as of Sure.

say, for increasing. interest have Germany, CH-XXK also in, on international that's We example. table is the F-XX

infrastructure fired even products, worse oil there's at and PAC-X. across-the-board THAAD gas interest for to cities. itself these and being defend and Middle against got major So, has populated an missiles in East

so, high And products of kind and that in demand part of well. those others as have the world

Jay Malave

in year, with those dial. Peter, and I -- orders international didn't which about those recall, we well. are about $X volumes got We've it you if some of talk XX we will Multi-Year will XX, actually, Black results, of Lot quarter. to have as F-XX quarter is numbers they this And the in associated classified. one billion but in pillars award here Hawk our the our I'll a -- the expect, had it's we those growth a first just big first mean, move X, And add multibillion-dollar really award here really

well. excited So, very about that program as

And year. of year the so, for growth and heading balance next we're into positioned pretty well for the award

Operator

go to we'll ahead. Next, Matt with Akers Fargo. Wells Please go

Matt Akers

potential with have your There's do I in new that this a on early some as may outlook is as refinancing pension risk year? are? on I line your transfer those could what wondering might QX. results talk of of impact about kind the think if release and you you was And those transactions what

Jim Taiclet

Sure, Matt.

few just over last years. insurance, over is the pension, companies seen do from management essentially you've transferring of is matching This to insurance perspective. these and a liability us and what liabilities having one first The the assets transfer

doing And contemplating those. another so, of we're round

occur refinancing to and debt, in bit multiple out the the than debt it's a matter for maturities particular waiting year. little really taking of just each On earlier just a years of that

have them. that. may as impacts those give P&L so, the that And up associated through with those that may But in right have we sizable say transfer front the don't year, heads We're the some quarter, in pretty still I about Last now. impact on pension as a just liability that to early to me. had here working just second you happen of

Operator

Alembic with ahead. Global Skibitski go Pete to Advisors. Please go we'll Next,

Pete Skibitski

congressional this, touched on we hadn't for 'XX, support came When support saw fiscal 'XX administration because out to with the of but really it admitted Ukraine for congressional defense And timing. 'XX. back you getting its budgets. obviously, it and taken account into request the Jim, in

a than ago. to budget a I'm broader of seems request you that Congress be it even 'XX? have more years if in Because of So, support how may was the there's couple additive wondering like sense there the to

Jim Taiclet

we're just Sure, to in. go Pete. environment I'd like the Look, back to

they on environment, ought look pretty course, and the meet have committees, the to budget what specifics defense like of underneath aware then, it's that. of the environment. points And think I evident view and well leadership key that are of this to in Congress

can't for So, look you But a ahead they get that But matters take or be to if and they'll is not the me the I these to recent point their is to a in this predict Congress does appropriators going historical yet. what and our outcome place. view really beyond, and terms, fashion own a have day, in at of because of actions are of them end the in authorizers have point quantitative tends at voice.

Operator

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

Myles Walton

related underlying correct rate on you profit I'm those booking If if the EACs, correct for X.X%. the about adjustments, volume, not to was

you for quarter. that's think highest in I the ever guys seen I've

two So, lift booking of or the you favorable One, did reflection or systematically, is a this just rates adjust mix quarter? underlying more the happening questions. in

Jay Malave

a of it's I'd say, Myles. combination both,

to close pretty that You're underlying recurring margin percentage.

good you was as adjustments. year you higher run profit as expect, forward carry about as would rate forward If think year as it, size positive into And net those last moving revenue. pretty recognize far margins a you

in what be as of And the we'll the to the generally expect is so, see plays quarter I well. also you for first mixes would game of the what saw But in balance part year. it

we year, to did about quarter, the be profit. of XX% year-over-year. expect about did year, we This profit we first so, adjustments in And lower our Last our XX%.

that For to year, to XX%. the be closer expecting we're full

outlook. We're the recurring with And little with transition very a with very so our comfortable profit bit it's comfortable EPS here versus adjustments. again, seeing our we're just margins of -- and but a we're outlook, -- versus margin

Operator

we'll ahead. go George with next, go Shapiro to And Research. Please Shapiro

George Shapiro

your revenues, had down quarter for nonrecurring MST, also down in if first Jay, billion. it at $XXX $XX look it's quarter the of guide at if you second the was billion benefit you million $X the billion, you adjusted $X for

a So, year, better somewhat second of particularly quarter like is to when in Omicron seems terms last relative the why won't little be going it away?

Jay Malave

year. that year-over-year, even while question, the dynamic it's of still dealing not first of we'd describe half it. so That's down a have significant George. we're be the guess, We're And -- down way woods. improvement out still since the -- quarter we've second though is beginning the the around Look, the is a we're good the still and would for I to still seen best us of environment, year ballpark around X%

And still program We half back half impact quarter And from really expect the placeholder of up so, itself we're would that dealing that the some it year, UK. are holding the level that's to number. still Weapons the in impact the year. clear the of Establishment there. have will of Atomic second through of We the for with the first

And so, pretty a -- are year-over-year sequentially tough. big step-up. It just is compares it's

$X update accordingly. place talking that's we for if that moment. the And be You're nearly, right changes, anything billion And think to around the ballpark. course, we'll you of

Operator

Please Vertical And we'll go go Research. to with ahead. Stallard Rob

Rob Stallard

whether on be ESG in different. I might This a are this been might of be looks now wondering to as whether what a things coming perspective and seen for There's any shareholders lot Jim. have new register been the on your question discussion about defense changing? an shareholders you've construct was or

Jim Taiclet

you not rights human might I my can't do Rob. effective in that an and how they mean, economy aviator Sure, might authoritarian this of do and myself been really have military governments an personal is protect having if in are constrained view frankly. it, they what

and we've and occurred recognize trend. human that starting this it But because global like equally with that interest investors Europe recognize important. some the very But, Ukraine an warming, anti-ESG international are from other think security same I'd people change, around that category. that up put industry. are in put world ESG before to increased the that would in which is also was topics I national security notion I I corporate the So, necessarily governance not not our seen climate

people it You we're the safe, could neutral positive market can especially But live conditions flourish, can the happy, lives a call and economy. economy maintain trying perhaps. free where or to

Operator

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

Doug Harned

Middle did a in East. haven't in in But now of we the THAAD, you you over activity. of year, area the the East going as administration more $X course Missiles see East Fire and critical PAC-X. terms the Control was in from do Trump Middle the And forward billion How certainly, Middle here? much Fire Control trajectory and than Missiles the in Last seen

Jim Taiclet

stations world in look to the demand missiles that, capacity I'm and from countries worthwhile and got situations have right is in because, it. to around effective again, everywhere your see Ukraine, and when way sure country. We've signals not for hospitals that a PAC-X regional it's especially that approach THAAD like missile an the train at you recognizing are hitting defense

we anything, might that, products So, if certain increase getting we in have the are demand. signals to to global capacity meet

regional greater So, in at do by world. what lesser, is threat sure best on way hasn't that down gone of instead the of look I'm Iran that approach the not the the And either, it's getting to it. to tends part based way,

Doug Harned

there. of Yes. Asia, should Europe -- in I interest strong Because was going. seem and where that's And it some some there like be does kind real

complete for trying gaps and should add assure? out even you PAC-X these some potentially in of essentially takes systems lot maybe that, as fill So in just growth parts the and THAAD, just build of of up other because -- world to as any puts the to pick and expect Middle to you the understand we East, a there

Jim Taiclet

data of but don't on it We to soon. expect that. little about, -- in speculate you kind I quantify the Doug, a to would it something way, want bit quantify I'm directionally, little frankly. could But it, to a data-driven it a that first. sounds too Without come

Jay Malave

and XXX just spiking PAC-X, on where XXX. around cycle multiyear year a we this up on units, I'll planning to deliver up that's are add, Doug, Yes. we'll

it's that and already. of some about contemplates you've things positioned well And the so, talked

Greg Gardner

is this John, Greg.

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

Jim to turn So, I'll thoughts. some for over final back it

Jim Taiclet

last conclude the still people winter, Sure. reemerged entire and COVID it. dedication, did done, get their where the many XXX,XXX to contributions they over I'd Lockheed had our by we and months, to team, strong all like for and today especially in Martin call thanking production the

our under to resilience a outstanding of the solutions efforts our with customers to performed their for has and shareholders. through And lot time. positioned workforce a technology ongoing long-term long company our is for Our now and value deliver commitment, challenging and circumstances

today, and earnings I for we joining you So, again thank the in our want with to speaking forward on you July. on all call look to call us next

Greg Gardner

concludes That today. our John. Thanks, call for

Operator

that and Ladies welcome. very Thank conclude participation. conference. does gentlemen, for You're the you your

disconnect. You may now

Lockheed Martin (LMT) 19 Apr 222022 Q1 Earnings call transcript