Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lockheed Martin Corp (LMT, Financial) reported a 4% year-over-year increase in sales for the first quarter of 2025, demonstrating continued growth momentum.
- The company generated $955 million in free cash flow, after investing $850 million in R&D and capital expenditures.
- Lockheed Martin Corp (LMT) returned $1.5 billion to shareholders through dividends and share repurchases during the quarter.
- The company secured several large missile program awards, including contracts for precision strike missiles, THAAD, and joint air-to-surface standoff missiles, totaling up to $10 billion in future work.
- Lockheed Martin Corp (LMT) maintained a strong backlog of approximately $173 billion, providing a solid foundation for sustained growth.
Negative Points
- The book-to-bill ratio was less than 1 in the quarter, indicating that new orders did not keep pace with sales.
- Lockheed Martin Corp (LMT) faces potential impacts from tariffs and the NGAD program decision, although the company is confident in mitigating these effects.
- Space sales decreased by 2% year-over-year due to lower volume at National Security Space, primarily related to the overhead persistent infrared radar program.
- The company is navigating a dynamic tariff environment, which could lead to timing issues in cost recovery.
- Lockheed Martin Corp (LMT) did not win the NGAD contract, and while they are not protesting the decision, it could impact future growth opportunities.
Q & A Highlights
Q: Jim, regarding the NGAD decision, have you received feedback from the Air Force, and are you considering protesting the award?
A: Yes, we received a classified debrief from the US Air Force. We are not protesting the NGAD decision. Instead, we are focusing on applying the technologies developed for NGAD to enhance our F-35 and F-22 platforms, aiming for 80% of sixth-gen capability at 50% of the cost.
Q: Can you comment on the executive orders from the new administration, particularly regarding FMS and federal acquisition regulations?
A: We welcome and applaud these executive orders, which aim to reduce bureaucratic red tape. This will speed up FMS opportunities and acquisition paths for both physical and digital technologies, benefiting the entire industry, including traditional aerospace and defense contractors and technology companies.
Q: What are the underappreciated risks of tariffs in your business, and how are you navigating this environment?
A: We have protections in place and mechanisms to recover impacts from tariffs. The main concern is the timing of cost recovery. We are confident in our approach to mitigate impacts, which is why we reaffirmed our guidance. Approximately 40% of our contracts are cost-type, providing some protection.
Q: Can you discuss the F-35 Lot 19 timing and the readiness of international customers to take delivery if the US cuts back?
A: We expect Lot 19 in the second half of the year, which is included in our guidance. International demand for the F-35 is strong, and we are confident that we can maintain our production rate of 150-plus per year, even if there is a moderation in US production.
Q: Could you elaborate on the Golden Dome project and its impact on production at MFC?
A: Golden Dome is forming in three segments: ground-based systems, space-based systems, and an overarching command and control system. We are well-positioned to support these segments with existing assets and technologies. The project aligns with our 21st Century Security strategy, and we are ready to scale production as needed.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
