• Revenue: $17.1 billion, up 1% year over year.

• Segment Operating Margin: Expanded 20 points to 10.9%.

• Free Cash Flow: $2.1 billion in the quarter.

• Backlog: Over $165 billion with a book-to-bill ratio of 1.3.

• GAAP Earnings Per Share: $6.80, increased 1% year over year.

• Orders: Over $22 billion in the third quarter.

• F-35 Deliveries: 48 aircraft in the quarter.

• Dividend Increase: Quarterly dividend raised by 5% to $3.30.

• Share Repurchases and Dividends: $1.7 billion returned to shareholders.

• 2024 Sales Outlook: Approximately $71.25 billion, reflecting 5% growth over 2023.

• 2024 Earnings Per Share Outlook: Approximately $26.65.

• 2024 Free Cash Flow Outlook: Approximately $6.2 billion.

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Release Date: October 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lockheed Martin Corp (NYSE:LMT) reported a record backlog of over $165 billion, indicating strong demand across all business areas.

• The company achieved a book-to-bill ratio of 1.3, driven by significant orders for precision and air defense munitions.

• Free cash flow for the quarter was $2.1 billion, supporting a 5% increase in the quarterly dividend to $3.30, marking the 22nd consecutive year of dividend increases.

• Lockheed Martin Corp (NYSE:LMT) delivered 48 F-35 aircraft in the quarter and expects to deliver between 90 to 110 aircraft in 2024, with a strong future outlook for the F-35 program.

• The company is heavily investing in autonomy, AI, and digital technologies, demonstrating successful AI-driven teaming scenarios with drones and ground vehicles.

Negative Points

• Sales in the Aeronautics segment declined 3% year over year due to delays in F-35 Lot 18/19 contract negotiations.

• The company faces challenges with the F-35 Tech Refresh 3, with only 95% of combat capabilities validated, affecting delivery schedules.

• Lockheed Martin Corp (NYSE:LMT) recorded incremental risk on a classified aeronautics program, resulting in additional losses.

• The company is experiencing pension headwinds, with plans to address these through working capital improvements and potential debt issuance.

• The ongoing Lot 18/19 negotiations for the F-35 program are impacting cash flow, as the government cannot make payments until the contract is finalized.

Q & A Highlights

Q: How is Lockheed Martin approaching the integration of AI and drones in tactical fighter systems, especially in light of the Air Force's rethink on NGAD? A: James Taiclet, CEO, explained that Lockheed Martin is preserving its optionality based on the US government's strategy for tactical fighter deployment. The company is investing in Skunk Works to develop technologies for sixth-generation aircraft and crude-uncrude teaming. They have developed a pod for the F-35 to control CCAs and are working on flight control systems for this purpose. The focus is on maintaining volume to meet threats like the Chinese J-20 and Russian fifth-generation aircraft, while also investing in autonomy and AI for future systems.