LMT - Earnings call 4 2023 | Lockheed Martin Corporation

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Operator

Good day, and welcome, everyone, to the Lockheed Martin Fourth Quarter and Year-end 2023 Earnings Results Conference Call. Today's call is being recorded. [Operator Instructions] At this time, for opening remarks and introductions, I would like to turn the call over to Maria Ricciardone, Vice President, Treasurer and Investor Relations. Please go ahead.

Maria Lee

Thank you, Lois, and good morning. everyone conference fourth call. welcome year and to earnings XXXX like to quarter our full I'd

These Jay Financial Joining Jim that statements President Officer; and Taiclet, today are our our me on are to used materially that, address also pursuant Chairman, We to and the not to website call regarding that historical results are Chief considered today's actual Relations cause made include the made forward-looking on in in Officer. Statements on call. that call facts are Malave, call Chief and Please the forward-looking today Executive at SEC and like forward-looking those to filings that Investor charts. With during the release from those materially results statements. I'd may the the safe differ may measures of press information description harbor the to website a today's our provisions in for may over of charts statements. the some follow federal charts today's differ access and comments. www.lockheedmartin.com factors Jim. see from call our securities our non-GAAP plan law. the Actual in the Please click view link to projected of to be turn we posted our supplement

James Taiclet

morning, strong closely shareholders. working progress strategy and call. XXXX, Martin, security the In customers, for for Thanks, financial joining and and earnings XXXX of our results our us our everyone, Lockheed advancing you Good and thank Century made quarter XXX,XXX Maria. year on delivered our XXst full fourth with women excellent men

year-over-year advantage other take boosted services satellites, did came broad a share in than to year as earnings our $XXX backlog radar company we of of billion. per of increased invested and capital demand stronger advanced of year-over-year Turning opportunities, systems to position through X. across Robust the mid-single $X full XXX% to growth growth technologies returned cash X% portfolio billion of billion and $XX.X Chart dividends $XX.XX. and expected, aircraft, future development sales $X Full and of record XXXX. free anticipated, to To digital per cash helicopters, cash products, and free billion percentage shareholders which in free share research as repurchases more approximately We these $X.X digits. than in the in flow combined. flow, generated over share flow and We resulted billion for

single-digit free to XXXX a Our the Lockheed low cash growth expectation of of outlook, and for XXXX $X.X sales base billion flow. Martin's billion $X of higher financial off include in range

dividend of returns sustain Our for expectation billion XXXX. ongoing and $X share in on shareholders will our repurchases to focus

of we vision best that advance effective provide believe deterrent We to should plan the to our it Lockheed year in armed Martin allied U.S. to forces the to capabilities at conflict maintain the and technology for arm to our and with to also industrial capability bring as is need win to. Century security and further responsibility our help we XXst an

investments teaming making arrangements with apply with expand of chain increased Through by to and measures work our closely we to and in First, technologies. sources resilience. strategic supply supply cutting-edge anti-fragility start-ups

material we as heat we investment, such additive applications which dependencies in minority to example, management with and For thermal accelerate progress, a a complex collaborating have manufacturing are our and reducing exchangers. supplier process

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in in Juniper including secure, Networks, Verizon, demonstrate Radisys Colorado. resilient, XG network military together with Microsoft, worked Martin Intel, live team, Lockheed a and quarter, hybrid demonstration field to datalink fourth the in and example, Keysight For a successfully a

performance of XG.MIL performed our as air best absolutely those for hybrid by combining our technology space system network with for we field Our network the capabilities, of commercial in setting commercial a demonstrated operation solutions operations. teammates. cutting-edge multi-node Together, land, tactical and and and integrating customers unified a

deepened ensure with internationally partners Third, operations. and and relationships industry in maximum that we interoperability drive U.S. in the to allies military both can

and situational We effectiveness work other This customers. of are digital improve towards that elements and value also Phase partners network can the to battle AIRXXXX, system. Last activity a collaboration our the approach and provide is will kind a contract, the and technologies their economy. key production develop Australia with making and the deterrent of vastly of in centers that's aircraft, system Martin command path with with its contributions and a uses example allies to allied workforce with was our their to their and progress mission-centric mechanism munitions across Australia for joint the interoperability. production society increases latest One capacity Lockheed first satellites, from together X reduce guided to increase technology awarded finder U.S. management manufacturing awareness suite weapons a XXXX terms week, their of and of help the knowledge fragility from which trusted swift and capability reduction guided risk serve transfer in and as defense and

line would U.S. being in billion Congress status budget. Turning discussed of current $XXX X% briefly than defense agreement The an the with support now top XXXX. budget, the higher to administration proposed the

supported F-XX configuration aircraft technology and XXXX total the believe bringing continue We quarter, to the will highlights from Martin the of U.S. fourth in will or notable Lockheed to our operations. XX HS. and process F-XX. unfolds. I'll TR-X Starting with strongly few programs the in well monitor X now that be review refresh We a XX continue the Aeronautics process the delivered status to budget as the

over subsystems. test, delivering making are are TR-X flight XX% the mission and TR-X We Today, is advancing integration of we first continued the software include in to configured additional aircraft functionality the progress aircraft. and currently further towards

somewhat acceptance of our advance, customer quarter remains A maturation software system originally continues delivery process more taking anticipated. this than target. While second it we is to time

we now be believe the more quarter acceptance. However, for software may that scenario a likely third TR-X

and right and data to will this will the get capabilities unmatched time the include many worth time The customers insertion requires XXX technology it We TR-X increased pace air-to-ground the storage, air-to-air to years range both production between is aircraft interface more capability for for capability are jamming for cybersecurity step delivery achieve and provide target onboard with the to the year it. TR-X of digital infrastructure suppliers the level because of accurate in processing and data attention and of of our resulting keep capabilities the this run, provide advances XXXX to be absolutely hardware sensing, To pilot with taking technological function first and These recognition. long advanced munitions, user and demands types XX future. come. and for reliable this

member November the of one operational the Netherlands. digital decision international remains will a aircraft Korea world-class the and as aircraft. which the that Romania enhance than provide bases safety ensure operating will made in government, XXX be advance Republic the first partnership additional jets. center and domain F-XX In by the F-XX cornerstone training also readiness continued of inaugurated all capability a with and be more we of for increasing Europe of demand December, to Also the procure European F-XX NATO flying F-XX fighter XX center Belgian This the a first Romania F-XXA to of is to the in across F-XX in connectivity the Given XXXXs. operations, very strong. and will Aero to training stationed was and December, mission presented F-XX in

In Aeronautics by experimental to was continues year. over The of of is commercial boom, flight about to month XXX the addition, selected first to earlier totaling future Skunk inventions for we aviation's ceremony will And Slovakia pioneer later change, XXXX. well. this quieting X expected Works take the Time first quarter. jets and and supersonic was aircraft through the aircraft XXXX. as continue can fourth modes of The for XXX a supersonic groundbreaking by one Slovakia innovation is Works one. at built transform a tell land and I in F-XX challenges. Block flight NASA actually Skunk Magazine's persistent delivered expected XX The this you unveiled of best the Aero Deliveries XXX one as XX rollout sonic

delivered to final or guided South against as including well. integrated partner order States, Martin test contract and remains late area date, Strike quarter, also, army's a of fourth the now international the program. this familiar and successfully of Missile missiles, and system defend the or one U.S. MFC Norwegian on RAIDER that's FARA To Army's push of forward technological you us and Romania will Our government produce for to range Army's attack radar the Spain that system GMLRS, of support qualification offer to an RAIDER missions and with. X extended acceptance Norway. of and too. to system SEAHAWK interceptor October. PAC-X government Australia for as future precision well missile in strong that for the well. Sikorsky air United advancements MH-XX FAAD, conducted X, system X production XXXth Also interest Prism, HIMARS completing aircraft modernization will which for future the U.S. tactical requirements, new for for high-tech turbine the in This the quarter. strong engine the the of the for our Romeo the an the multiple the PAC-X PAC-X program. RMS fourth X terminal are designed phase them through are the the demand high-altitude MH-XX helicopters defense India, launch to first delivered the to signed continued nations Navy with defense missiles we of closer also for many marking Patriot flight or In in the cruise The Switzerland anticipate countries, installed capabilities. defense And system quarter, Lockheed XX U.S. This we build X in each first U.S. Greece, as on more ballistic Korea, range Army rocket step Romeo awarded XXXX. also the the MFC and letters reconnaissance in X year, and extend Navy hypersonics. International and U.S. XXX the MSCs, brings Army's as XX RAIDER Sikorsky we business Missile, improved or aircraft Spanish missile saw air has to strike delivered Precision

provide United an to small modernizing risk critical Martin's are security a mission to Lockheed flights contract The missile billion The reinforcing million space. board. X Lockheed follows layer the and a vehicle space the and certification and or April. required $X tracking was planned successfully Intercontinental almost soon be be and $XXX space launched to develop maturation was launch week, for happen technological contributions as award And Air a vehicles those Force infrared space Development second MK XX for nuclear sensors Ballistic on contract earlier recapitalization are awarded warning Alliance Centa of reduction tracking Martin space the vehicles national This missile turning first sats, Sentinel of reentry Finally, awarded strategic the defense X as triad. technology Sentinel. Agency the January. Launch Rocket Missile. and to The last top in deterrents and for X tranche the Vulcan ICBM Space complete new the announced to mounted U.S. on contributes vehicle XX contract to will to reentry nearly for to XXa could

XXXX. at call lot of X of and Jay satellites to A later of operations. And expected launch all that, to on our Lockheed join questions. group is turn for the first with you going in The I'll Martin, over April

Jesus Malave

our everyone. full morning, Thanks, recap financial quarter our and good Jim, year XXXX for provide will fourth XXXX. results and Today, and initial guidance I

and finish year, January. segment to of year's signals led exceeded to operating improving we'll basis an expected than operating our sign by Sales record in about the Martin's The about which sales quarter please quarter release growth a chain follow last synchronization with quarter. a segment consolidated strong year, billion X.X% the supply volume describe As less was the all a $X profit $X start also for we and the to the higher demand today. On across fourth stronger last Chart was expected decline quarter expectations with the and fourth improvement I leading the close betweenLockheed due year-over-year fulfillment. profit. to on along than X, and matching the Overall better for close for lower in sales earnings. We billion, on have largely to our X% to throughput, better-than-expected nearly earnings net the was originally absolute internal X down X.XX had equity with results with X% results, web and posted with year charts was segments. lower Book-to-bill sales due profit strength than year-over-year adjustments material

per grew more lower to Chart profit offset Moving lower earnings and than the expense X. segment by on EPS share interest X% higher with year-over-year, benefits fewer mark-to-market losses. GAAP and share count from

Excluding mark-to-market nonrecurring $X.XX up activity EPS charges, and adjusted or other was X%. year-over-year

higher adjusted share $XX.XX, consistent resulted year improvement this our and sales expectations year-over-year with about year, was per from EPS growth. X% January. $X For The up EPS the in original the steady last adjusted by

of quarter billion full billion timely free XXX% of free and operational to our share by quarter the $XXX approximately We year over the from dividends by flow. $X.X collections. X. generated billings repurchases and reductions quarter cash Moving We or helped our flow and cash conversion working to year, $X in to $X.X milestone capital fourth on Chart billion cash billion achievement million the the strong and for commitment and shareholders in $X.X for flow this returning maintained of in through

into converging let the to The pause demand on is is key getting industry perspective. cycles. X takeaway the put me numbers Before here in that crystallizing growth segments, based

interoperability First, longer technological intelligence. second, improved of and a of near deterrence platforms to the And connectivity, recapitalize and systems meet environment; embedded in security strengthen over and maintain frame. midterm lastly, with the superiority support that effectiveness security sensing, platforms to and to existing systems requirements time

Lockheed Systems results growth, materializing part, XXXX and billion systems X% slower company's is endure positioning to to strong delivering it as as capabilities. increase these a advanced these with expected. backlog our show in again outlook year shareholder drive our as the demand by in return Martin's ending expect We Martin trends has, and to cycles Lockheed well by than originally record the to requirements integration growth long-cycle technology and nature earlier match returns. to The closely evidenced but $XXX line led that demonstrated we in our a And top amongst multiyear of confidence demand

Over years, we on the of current about past have the XX% repurchased X capitalization. market

offset X. sales were Skunkworks timing. Fourth and details with at starting F-XX to on ramp higher F-XX Okay, primarily cost year-over-year the by with back on aeronautics the segment at Chart and lower Aero quarter comparable production volume volume production

lower As expected, operating profit profit decreased X% from the prior adjustments. year due net to

For platforms nearly to offset in lower the Page year-over-year $XX X%, lower due year, operating on a with by Fire X% PAC-X across decreased was up as the production growth quarter Segment profit to more lower adjustments. Profit F-XX. due sales offset the profit in due were to single-digit Skunkworks ramps to Book-to-bill primarily to to leading the and for cost low as on billion, LRASM. all F-XX a on by supplier year X. declined X.XX, the driven and XXX and on backlog X% Sales aircraft than production growth year-over-year, to volume decline Missiles partially X% recognition program. and classified XX% by expected JASSM related volume the decreased loss Control backlog. Shifting in timing, in

defense for backlog X% for classified Sensors billion, misses. at growth driven to integrated sales growth lower by year program loss. cost was X.X, year-over-year down to strong as the $XX profit strike XX% and supplier adjustments and were strike year, decreased missiles due to the program demand tactical was and air leading in offset Book-to-bill profit and the transitions by For and Sustainment in tactical X% and timing. Operating Global missile

Mission in and declined volume IWSS mix of lines Rotary at X% and X. the sales Operating increased and driven sensors business, to favorable programs and deliveries and on International to mainly across by a within Systems logistics offset of quarter, handful contract Blackhawks. Page of Sikorsky lower due our higher systems warfare Sales systems within profit partially X% by portfolio. integrated Turning training our from

offset from backlog to lower driven volume design as the management increasing primarily intake systems. On declined adjustments. more billion as Chart year, platforms as $XX next-gen was in and lines to profit for X% the advances from from portfolio. growth the of with and expected, Operating increased Interceptor net up in to For missile moderated defense, review of business. based adjustments quarter management the higher X%, ramps, radar than as space profit its were XX% sales milestone. as battle on XX, Sikorsky successful X% Operating the towards primarily Radar declines system profit IWSS in driven year completion by and XXXX growing in Book-to-bill profit order on due X.XX and strong higher by and growth sales well critical year-over-year, that battle design X% program the preliminary with compared strategic across review other

lines sales higher year, across than from volume $XX a remains more Space X% the in and quarter solid XX% For sales. offset grew profit growth and increased income. of equity lower with adjustments And by fourth benefits profit or as at again billion grew businesses. all X.Xx almost ULA backlog

XXXX Now Page the for outlook shifting on to XX.

a within expectations, to our key assumptions I'd embedded our guidance the discussing year. highlight Before like for few

funding made between assume as for First, growth top stated, targeting equating the we in the budget quarter. budget appropriations to levels FY third F-XX, in March, bills 'XX XXX within XX recent by passes DoD. line based X% government Jim with deliveries U.S. on negotiations, the President's to approximately progress the request, the we're On commencing consistent

of to billion, amounting progress mind, that X% than leading with a we framework operating between MFC X addition, classified X.X% the losses $X.XXX in result we between to from $XX.X our strong recognition the being expected be midpoint, expected is the end, points all billion to growth made at lower and X X classified in midpoint the With headwind sales at $XX profit and MFC anticipate represents approximately against profit billion with that from and munitions anticipate volume consolidated At losses approximately sufficient of MFC the growth in results. X we billion more benefits. backlog. as would way expect XX program lots, high growth. the adjustments margin on segments the the In $X.XXX Segment grow. segments At basis production of offset down midpoint the

Excluding the expected of in approximately to are margins impact, XX portfolio underlying basis be MFC XX%. the points the balance classified program,

around FAS/CAS segment last to a net interest Our pension expense and to billion expected little adjustment declines for XXXX, from primarily pension million lower EPS $XXX and higher profit between FAS to headwind, year-over-year $XX.XX. and income. with to along than led year less pension due The $X.X $XX.XX lower lower

of the $X.XX walk lower we've by operating and segment share down at $X.XX Page purposes the range. with offset mix than an headwind the about about of clarity, the with included impact For midpoint volume interest to from netting EPS profit is count. higher decline. pension classified losses, FAS/CAS program on Total MFC the Benefits of taxes provide more $X.XX, XX, a

Our billion. free cash flow between estimate $X.X for XXXX billion and has $X ranged

So cash bringing we capital with and timing, deployment. profit XXXX solid of based but pressure EPS it generation in loss XXXX year base, growth on sales continued it expect all another continued the some higher with capping together, off and off recognition

sustained of and sight to in record flow. We XX. with carry positive sales, growth profit will a summary, into us out-year free line Page backlog with that out closed XXXX So in and momentum on cash XXXX

processes to industry, will up the systems we our to and we course, returns in and strategy as for advanced most Of Q&A. the capital invest Lois, committed part open dynamic call our disciplined shareholders. With to that, let's the ensure remain of remain people, and to XLMX in continue

Operator

And Myles from is Wolfe Instructions] our from [Operator first Walton Research. question

Myles Walton

I you'd off the of incentives points. was about lower the or to chain delivery. are and one, you're F-XX lead simply continue then with deliveries, primarily the supply basis delays the Is a of on actually down number 'XX point build more a is there and which at inventory, absence the Aero result given as that XX in for have to on particular, can supply F-XX, chain? hoping in in for And to slow margins, that looking the down broadly, you

Jesus Malave

Myles. Thanks, Okay.

favorable we're margins what twofold. really the and for seeing XXXX it's On F-XX, are adjustments, in so profit lower

progress as difficult as One it of make retirements where on take we there. risk production, program getting still progress as the as risk it's ourselves well we're facing and the making the we're is F-XX, program into to this on rely TR-X and

we that seeing also adjustments the related the so program, we're chain, And effects profit that C-XXX supply we've on headwinds disruption the and slow in where on also of there. some some inflation XXXX There's down had F-XX program. assume pressures some to

and between look basis so at when talking half you're and F-XX. you year-over-year, say, XX And that decline C-XXX about points, half

cadence pretty there pointing On all for quarter. have beyond right delays and feel time. production are the cadence delivery at we in that quarter. To yes, point the third now, to where the signs restart any through are production were here But third that to we in F-XX, our our the would confident production revisit extent we that, in

Operator

line question the And is Bank. Deuschle from of from Deutsche Scott next the

Scott Deuschle

right thinking margin is level, about jumping it it company point 'XX, the here did at on XXXX, for Is point 'XX? off you Jay, terms XX%, or in ask XX.X% in that total the is high is of for or off the underlying identifying margin guide the jumping just XX.X% a to 'XX. margin, but in

Jesus Malave

Yes.

back to jump And of we up. off. do have a a XX.X% these the have get I the back at losses MSC to and XX%, the absorption including to on to to do path of classified think be but line gradual a start overall going it's program, march you sight

it up I 'XX, of XX. to expect expect there to XXXX. say, range the in in wouldn't to back to starting rate that XX at basis improvement grow that to of, back snap and would I to get continue points we be in so And XX until

Operator

UBS And Equity is from your Gavin question Research. Parsons from next

Gavin Parsons

like to look any pension XXXX? do that? forward sheet the use to schedule have offset contribution that you or Jay, beyond pull opportunity balance what does the And

Jesus Malave

question. good something a Yes, we've that contemplated. That's

about Just contributions in billion a perspective, we're XXXX. where range the we are from XXXX, zero of $X contributions required in there. required baseline of looking at

And so forward. whether an always looking or there's opportunity to at we're not pull

potentially the mentioned, strong balance sheet utilization our do of that. you As to

definitely We consideration us. opportunity made that's decisions under firm that's but for an haven't any on that,

Operator

And from our question Skibitski of is line Alembic the next Pete Global. from

Peter Skibitski

or much Jim a sense us is by the for of supplementals. Jay, guide can of what here give government's bit X-month how like the you the delay a in to 'XX the a looks order impacted on clarity still of little budget lack and

Jesus Malave

for that significantly. it's really our get the most build Yes, not inventories. able we're sales. as funding, case, the take we then part, we're Pete, impacted to In And to up to able

And why get contract so beyond if the just all it -- difficult it I March. this the March. more was happening my runway you clarity in beyond kept we've getting difficult very on on year extends intact. most makes very that finalization clear our into process going Because processes that things of budget That that the becomes in to in of that's makes and were to those And convert the part, sales. for dependent for and out comments run

Peter Skibitski

anything and And NGAD? expecting the then Okay. on big maybe in Appreciate timing you're awards it. of 'XX

Jesus Malave

Lot from big program. sales F-XX XX, we're Well, talking just a perspective. 'XX the one some key for a that is about things

on across like really multibillions portfolio. one that beyond well. say there as are any can't another that there order 'XX our We which also have requirements. things in have classified approach there can would PAC-X got dollars multiple we of contracts into this particularly get year. some I But I for There hypersonics FY -- And lead orders, awards are We've that. of also, is for is dollars would some expecting you're billion. long the things space, be talking CPS we F-XX $X that billions

So number there. a there are

As in on progress. certainly in those those keep clicked the report and get off the we'll you appraised year,

Operator

line from The next is question Citi Jason from of Research. the Gursky

Jason Gursky

you update the and throughout you T-X I year? quarter. are the contracting kind you're -- cadence third more the one little for Can less Tim, for fixed year sorry asked discuss half just then, the if that just to on and you year? in you're of of does whether and potentially the next for bookings, potential industry of specifically the deliveries a what's what to just that towards the of then seeing thoughts bit environment about expect XXXX. for second some that to and risky of of toggling in expectations current on you F-XXs how F-XX the the you you're maybe get quick the of happening to aircraft expecting pipeline just tell missed year? a And you version a reacting a trying Jim how clarification and competitive environment and all price and deliver on year versus but year year overall a the that in XX based catch-up. of I'm back to cost And Can you, in whether the on older at us on XXX sense with being maybe Jay, us it, the the and throughout book-to-bill XXX kind programs. your truly about this this, for the plus, this get Do bit deliveries the acceptance you're doing

Jesus Malave

have the of deliveries will the But part, year. XX% the in half half. back we talking actually deliveries in the do get you're of handful first the most we of a anticipated So Jason, happen let for me deliveries. the expect into

I hand it Maybe Jim. give over of little a think then to I'll way just And think so to a bit kind just handful, of that's about first color half. the really the in and

For be a the to pretty X year, have of a would XXXX. we to we solid strong above still in book-to-bill demand, that again yet expect line there be sight and

have all that in is the well to question sight just of our mix. continued pressure and and things these growth that too, as to The of to saw thin,gs part things, plus. we line have for budget these orders approved in happen. materialize. cost couple But be to done as obviously, so A you've in was due thing And has of the interesting is XXXX about margin backlog. there the The

XXXX Our contracts went cost-type anticipating pressure XX we percent to from year. XXXX. of margin were what of of the relative in to about in in points in XX% itself basis XX% sales caused That some

And from some of an of which these the be in contracts, cost-plus of actually kind of we in technological so think we're way well contracted stronger tolerance will seeing bodes types for. programs risk uptick terms

that as risk, types that thing more that ensuring what that analytical we -- we for think we're may accounts we're I here so a discipline we're Jim the there's is than more pricing. lot just as the about at we capture way things our other are pricing really that well. we support assessment we just is, but contractually, looking just And that to pricing any have also a, the risk thinking we And the and to that speaking, Do have advantages and of generally approach employing trend led more way for recently. vehicle risk, that a of Well, make talk an technological a is that appropriate favorable has about contracting

approaching things going that's so been into Jim hand way over it really year this the And for XXXX. And we've to I'll for

James Taiclet

Jay. Sure, Yes.

and and matching what lot near-term described, near-term I'll piece a company, that government there's risk just of pricing it look, really is say. the the the with So contracting approach we're our to Jay And profile long-term industry. within of a a taking

monopsony makes and so know these don't there's some do making or how for most part, monopsony Boeing of gel I take what or much or the to for advantage a But meaning or they've a of what customer risk look, decades environment cost cost buyer a government's I I've power Dynamics been other cost in they're make will, will industry. for programs decisions. you the said taking of of plus power, And right, ability that over and there fixed their buyer is companies that the we have which we're and what guess, doing you are makes. way, technically tremendous senior the that them because Defense base, can to that everything our price as we've feel credit even overruns, that number single recognized lots the And here, a tremendous in the over scheduled Now last delays almost what's pricing years to monopsony whether deliver the result happened cost, must-win give cost you of and programs on on capabilities. is environment are over that they have that competitors if

reviewed by et multiply cost of cetera. you overruns, risks those delays, get when of a you lot a Congress, programs So X lot schedule together,

with don't been I've good near must-win business certainly term have opportunity risk we profile, our our company, hit not, won't may with So in be we and we any implementing a at those, If we Martin will so a If have advocating we the Lockheed win, anymore. parameters, bid. limit balanced will go beyond If price we it. bid. not competitor programs a

If that so we are in fielded to traditional large so include are do products addition so the all And effort industry, price need federal we to delivering capabilities to you've with that as into do a especially towards companies all The start there why that's right? price fixed but to it with we contract, small cohorts can even And capability price, we often approach a year. provide products to because even are migrating your products that's every fixed which we an new tech it adjustments. in this. we be have products, you right? multiyear capabilities, and today, our got information, do So and/or technologies, digital near-term right? longer-term means sell cost well, as is defense far, the commercial already regulation and industry much is is locked approach of we and delivering with can the either acquisition kind which value collaborating our would written

chain, for defense that R&D and DoD. investing tough their commercial that the department tech lot literally traditional in healthier in thing to scope time But of will and government. bar to industry, who It's time. take are invite companies of going be under look can the So as their supply at the subscription. XXx of but Congress move going really our all talent what it commercial of to that and briskly to industry in take as changes broad value-based with put will the one make also effort to industry bring to into we XXx which to that if it's do part we is on are a It's want but hand, want will basically, those That's companies into an we our take aerospace defense probably as attention And partners we act the it. going kind and to as pricing, you R&D. the

also So a near-term will solution, long-term continue. solution the -- that's the long-term but

Operator

Your is from Bernstein. from next Harned question Doug

Douglas Harned

the and As this kind Refresh seem capabilities, as you you really Block going which to look to expand. delay out want longer, full IV at of X, build then Tech

how type you've And see produce knowing First, affecting on trajectory of the as sort as been as at X tech kind then refresh production you these the do takes But X rate, if of look here XXX full get more challenges longer. continue toward look they rate. Block you delays you implementation, to that can multiyear difficult? that your at trying

James Taiclet

Look -- Jim. it's Doug, it's --

aircraft, this Allied it's essential the to So basically, us. XXXX, keep is trying fighter the the went I that line et around rate. and I this at for -- from pilot to Forces, our need aircraft get think cetera, Demand up, in they planes continue to recapitalization that flying the world Air they're recapitalize service that U.S. it's right They've international was F-XX. is Navy, customers, I the the can the right? training got right? when of the we production still is

situation. the to optical our warfare transparency being and technology supply we're program can And suite. It's in think the the can military you've accept an community makes I of industry who joint makes and with brutally And to honest airplane. much you're services the electronic when is think realizing handle so test chain not be EOT, the is key and the industry electrical is The the us to system. the full to and honest air got various our and is evaluation with this technology that radar. drive And makes our us. do the who can what who do, industry what's that trying the vehicle, into What reality schedule. capacity. the Industry offices we industry to what about

inputs So our we with have to be and say and brutally suppliers' honest up. industry as the to is production government feasible the rate that. to keep what with an

honestly, are what industry tell a tell you And risks the feasible agree can afford it is Doug, this. what overoptimistic it traction more allies do exactly we with will jet. to commitment I about. chiefs be beyond I'll that, that's be do There think one in hope doing traction. our might what you cost service you government, you think let's for the push plan the what the if real the as and to starting deliver want might cannot because But we to gets and I our are And as executable ability the get technical challenges to it. technologies I on to meeting to these rapidly to physical like. talked and

Operator

is question Sheila next Kahyaoglu from from Your Jefferies.

Sheila Kahyaoglu

programs. about of program what in the what about could the to biggest you them. government in guys there takes talk MSC, the And from you highlighted your there puts I the the XX drivers the but top to Jim, to appreciate happened between are and growth talk commentary have XXXX, Are about bps how already X% and -- sell you terms missile plan you've just margins, if tactical defense for and and any the really don't classified want I line offsets? just on

is, can you was any thinking, specifics? give the do just itself in manifest portfolio, in portfolio specifically, fact is think you I will So your that where its it MFC?And

Jesus Malave

Yes.

MFC, and And tactical with strike expect, growth I'll would start the missiles. for So you drivers.

weapons, HIMARS, March the will LRASM, ramps those all guided in [Indiscernible] for XXXX by continue certain their and the cases, XXXX So JASSM, XXXX. towards and

the back that driver Air on largest by and And the the Missile of is PAC-X. followed really Defense Integrated So growth. that's of

start a ultimately by to PA we'll we the spike next seeing and more XXX and So few by XXX activity deliveries in XXXX. here get XXXX then years over significant as

business of the are the which So should that no to businesses, really X is really those X lines MFC are be driving the within be -- going surprise. it,

James Taiclet

And Sheila. when to gets value it towards pricing model, then a moving

command The first happen our customers advantages it. that's to information is call awareness, already and place would command situational in starting control,

cetera. for a aircraft, data, That's like that. sensors on heat sky, of So when those largely sensors radars out looms is digital and in domain ships, and we et they So services, from are then launched, AI intelligent things scanning with right? to do satellites, airspace, gathered whatever all the looking how got You've space using decision How digital missile infrared make right? the commanders services. in our options makers be and sensors, data we happen fusion other do present land data

digital data price my in cetera. the goal first application, where So AI do bring this commercial will evaluation, probably technology be fusion, we that because can place to et digital to value is

could invest in to only ago, that As value they're in not cost so said the provide minute advantage of our an in to participate They're took add airplane The XXx industry that. is that information. works. to pricing. material commercial way just defense I that industry going the it they on fashion we that a to investing industry up you aerospace can and delivering is industry It's these take what government, They're you a top. areas, need can their and going the not make all costs to not how give give airplane margin it and

be also in called Joint the So which real is Paycom Command like these program way, U.S. control of and the AIRXXXX systems, this, defensive Indo of And dimension. X by a something Network, command programs, is deployed will and Fires they're the [Indiscernible]

and this Martin, inside and I'll Lockheed been So then will have really technology you and for a look quick looking we We're difference, sharing And one. drawn the out that make it start. capability with U.S. digital where of sharing at where think road VOD. one really right? is now mission gaps I give and as we've established can we're maps services

aircraft those location that and data that's sync then tracking can what's much So solution towards turn a their on maybe link ships those precise and if if even provide in targets the that wide and a to to needed. feed ship area, an of from to we find vector actually and get radars the directly get information a could direct aircraft the more a satellite and Pacific flying orbiting swath scanning

would a that And mission. gap, that's in an have antiship we capability a mission gap so

various And do price it, within so basically because in besides it which industry. requires requires It which value is that's classifications, our XG.MIL. that many intelligence the and call do management data solution those of that requires not at how we management artificial can exercise, we an what a data companies something

to and capability and originated the designed heavy an to that. to value it'd be process to that So and one friends the partners the products, Defense, for of system they act digital to we value do. the I would But we're this value us is need with accept if and going process, some is bringing and which and of Department set at in what But to traditional but to too to kind interesting work platforms like the acquisition you're acquisition things to think contrast very purchase government scale, Department It to up industry, think we is, really I needs what is of complicated. consider lift. pricing, referenced the of a as do That got do court where to an want Martin, And services price reconstituted take actually built It's do literally us. on acquisition Defense a of traditional adjacent we've much topic. is this advocating this. with commercial something I've the go versus earlier, on be trying how Lockheed that gap might we price at this can not time its

Jesus Malave

headwind, is XXXX. about back, XXX their circle MFC is for basis Sheila, just XXX. you I'll headwind use in year me the in XXXX. margin question. the example MSC actually margins look an of at your the on The accounted in Let program points compression as classified When

XX business the actually points. is rest their basis of so expanding by And

Lockheed business. is Martin, And so way do their to threefold. all really of In we're they're core we expect the across headwinds doing in them would these everything general, approaching

streamlining just structure cost opportunities keeping that First, and a costs indirect we're the exist. on lid where and tight overhead

about driving we're we're talked base sure cost chain is call, productivity earlier little bid on driven XLMX we in proposals. that And discipline the optimization, our cost in bit and also second making and a factory through direct lastly, The is pricing supply then just employing our reduction efficiencies. across

us even X be those with together able a so that us better future will And margins to we'll drive help to the headwinds. result expand confidence and give in these

Operator

Your next Seifman of question Seth is from JPMorgan. the line from

Seth Seifman

end you worked in clarification aeronautics about on in as we or the the basis one goes, X of year maybe based one then aircraft will to subsequent undelivered in question talked at expansion If segment points. I lot classified missile, the 'XX. think in The depressed seems we the to deliveries inventory that as only XX out probably that's about inventory question. thought margin and XX on F-XX, that's exercised the Jay, being of 'XX, XX 'XX. have basis far told Maybe pretty margin and And of over points X. think XXX clarification, plus and should production on XXX rate about there be the you've us,

of more we're to across XX think of there not discrete basis be making prevent And other that that there. that you the efforts allow than would some expansion So XX that Are that wouldn't talked there that points kind may company potential you're to you just about you for outlined? -- the headwinds support margins. aware

Jesus Malave

Yes.

to Let with come and question that back F-XX. the I'll start me first,

forward, essentially X it would lot Just going X. be XXXX margins yes, the versus on

take got lots. are in first in the volumes that these that you account that However, we're lot X into the to volumes versus

-- really there's gross headwind, necessarily about that change there. And doesn't so more much it think you from -- you a all it you're because in

we're because pressure. And not year. from so X lots X subsequent in the keeping lot a what's just to lift an that's There's going automatic

right, in rate about of anywhere the talked against about to I the is delivery On the aircraft F-XX, the between it, of think way undelivered XXX mean, expected terms right you yes. -- XXX Seth is to way I is it think XXX type

Operator

Epstein of Bank is the from Ron next line The of America. question from

Ronald Epstein

the you for opportunities opportunity thinking there's does meaning And the future Black I do kind question know, on heard forward, vertical Black I'll open Hawk first. challenges going the don't some you the that are Hawk? about What what lift. to for we've of

James Taiclet

Look, a it's and Black by Hawk, flight gotten Ron, Jim. the actually. hand autonomously and I've

fleet AI a I Black of Hawk. think Black like of the out and the in Congress reliable has use value modernization And these ring interesting huge digital to and There's adding there. platform numbers which real, and our helicopter. that's is autonomy the some a by capabilities in in potential. That's the lot Hawk, of across a think, units There's others I cores offline really a opportunity great that allies. today for Army's for

of be digital there's So this think more don't I of be else's done or upside technology a much be well how there. And is I very, may programs aircraft. vehicle, on can that anybody upgrade or they new proven do doing, want rapidly to lot and insertion can new comment but very not production a scaled with than versatile.

do I there think upside that there. is So

to resupply be by agree. Congress that to up And and that and technologies and units inserting will and fund modernizations to And make like provide those decision the digital every have are to those Now opportunity we services other put flying. But consider capable that trying the more them it keep them. to hot doing be missions aircraft mission, it a entire the air value that, much really of things in to it. that good that completing zone, when evacuation, make a autonomy you like into the will equation, will of like landing

Operator

of is question from the next Our Stanley. Morgan line from Kristine Liwag

Kristine Liwag

sounds of Jay, about discussion continue side into issues revenue. to linger, U.S. ammunitions it Jim, missiles public and chain your ability shortage demand mean, depletion potential on the commentary been company's there's from like today, a that mean convert weighing to the the markets I supply in the

improve? could the chain's how if system? things talk about monitoring? ability to the what So through see supply can you are improve And in XXXX products the additional taking to more you metrics actions you're you much upside get And

James Taiclet

of we're follow. system to take the The production out missile of taking couple Jay the ask a fragility make are and steps I'll comments to buried. that

been to one chain today, them in of we so materials a into supply using That's build we're the this and it's bringing the performing get international we can from third including is solid diverse of motors. equipment outside be which need very set additive we're in looking suppliers One in rocket a And more supplier of group endeavoring suppliers at piece. of rocket also, in for joint industry Germany, motor United U.K. as and do we States solid the have coproduction these to right? we to chain we're things, others and with -- well. are mention ventures hasn't kind specific, More can in well, should and tap I supply that varied that Australia are us on of manufacturing, to stand up or Poland, broadly, the opportunities more additive

we is which X So kinds hand the on these take better it how it's just those And pools, areas, taking. down we're these can comes suppliers, different approaches one the are more where supply on of some chain, more to things labor training, basic. diversity basic really to of anti-fragility

and then international which this make et Secondly, get thirdly take we their how into forces, them labor we of -- cetera, reliable is sub-supply chains, And and supply the technology we insert production mentioned. how production more their system. just can to advantage get system, do countries

production. Jay, we missile want X to to areas and of look it this So anything apply add? all our company strategy at you in core

Jesus Malave

we've resources. Yes. over I'll last deployed the just Kristine, say year,

supplier, sat on support program well deployed as suppliers to issues, manufacturing So resources on Depending the just certain cases, deployed and hourly we engineering resources engineering back actually we we've We've haven't management deployed certain the resources. and as, in cases. waiting quality improvement. workers in for have depending

did taken more see bottlenecks. where to done general we can help some as we've would mentioned on all-hands we so And the But we've earlier, that improvement. an support issues seen become continue suppliers and I we get them significant. these see deck where through. these expect we've And I approach, to everything

that to range. little terms performance We better that I able our what profit potential unlock are and drives expecting in we're sales would EPS end see and high point of what of you is upside, to to bit and a the continue. to And that improvement if

Operator

Our next Matt from Akers Wells from question is Fargo.

Matthew Akers

And and time do on down here the F-XX ramp over compares quick, Could the curve? come then program to sort of segment that margins on kind rate better latest you touch learning just real get on also as just you thoughts now? that back they of

Jesus Malave

Yes.

XXXX. We in XXXX. So we expect would here to aircraft in delivered X potentially triple that quadruple

got And so -- over We've there as aircraft WIP in is the we ended we're in certainly ramp force. the full year. XX

And so delivery from may that increasing is we've to cadence is, had pressure this because profitability a to well. I From it's trending a all taken you get longer production think, standpoint, us the point. standpoint, recall, some

puts on And our pressure that initial some so contracts.

contracts, those deliver see profitability and fully we the over deliver next improve few years. out as will on Here, subsequent the FX the on we

Operator

of from George the is question Next Shapiro from line Shapiro Research.

George Shapiro

made from at the looking made XX. Space MFC at ago, If here. perspective XX, look years XX XX, I aeronautics longer-term like made I'm a margins

XX all ago. of in in down XXX obviously basis we're those so overall, And categories years maybe points

that. aggressive this the now my And is, more bidding. trying to So a you're development, of was change fixed-price to question due lot

So to see? go in overall from we that margins used expect just when we see be margins are -- look what kind XXXX we up towards for lower see XXXX, where they they'd from we actually to could of

James Taiclet

here. George, Jim it's

Sorry, the by what here, earlier think bit little compression told driven There's [Indiscernible] customer, I I industry caused you in if whole today the is that. margin a will.

you're historically is should in it, wedded understanding to and to ways in necessarily they not their and to these at think necessarily model pretty this analysis traditional our senior negotiate now, got they tends business the management how out call companies. I'll -- this run boards space, are to at not other good seeing tends management of of And be to use the contracts. management looking I position quarter So figuring how companies what

interest of it even a things base. result help have needs as margins, said, years, so shareholders' and which And think difficult should we're there's XX the some a reverse and the to over prepared decline I our customer to account taking the about, to talked discussions you been we though the healthy all with that. But improve may last it industry. into are do we in some

Maria Lee

at the Okay. Lois, top hour. I think we're the of

just some back for final thoughts. to Jim turn over So it I'm going to

James Taiclet

Okay. Maria. Thanks,

our along Century call for shareholders. and employees internally, on maintain produced with created XX So and at that company cutting-edge transform to we over security this to the respect do to past for worked advance strategy months, our have focused delivered Lockheed I and again, excellence. our the as capabilities of right, our deterrence. suppliers have relentlessly defense its what that mentioned XXst the Martin they and department vision people says way, And what's especially all they own here, our this we're work and values customers trying positive our yields the integrated perform others results that's And company and and are

in earnings we with forward to Lois, the Thank So thanks again next our April. call. look that for on and you. concludes today, joining you us call speaking

Operator

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

disconnect. may now You

Lockheed Martin (LMT) 23 Jan 242023 Q4 Earnings call transcript