Good morning, everyone. Welcome to day three of the JPMorgan Industrials Conference. We are kicking off here bright and early with Lockheed Martin. I am very grateful to have them with us here to talk about the company. Jay Malave is here, CFO, Maria Ricciardone, Treasurer and Head of Investor Relations, and Christopher from Investor Relations as well is with us. I am looking forward to having a conversation about the company. Jay, I think, is going to start us off with a quick safe harbor statement. We will chat, and we will also involve the audience for some Q&A as well. Thank you, Seth, and top of the morning to you and to everyone here. I'm going to do what I do best, and that's read safe harbor statements. All right, statements made today that are not historical fact are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Actual results may differ materially from those projected in the forward-looking statements. Please see Lockheed Martin's SEC filings, including our 2024 Form 10-K, for a description of some of the factors that may cause actual results to differ materially from those in the forward-looking statements. All righty. Great. All right, very good. I don't know. There wasn't really much to talk about when I was thinking about questions for today. It's been a rather quiet few months. Maybe we start in the news and in the headlines. We'll see what happens with the continuing resolution that's now before the Senate. A couple of questions about that. Let's start off just a full year continuing resolution with some carve-outs for new start programs and flexibility for DOD. How does that affect Lockheed? And how does that fit into the outlook that you guys have given for 2025? Yeah, in general, I'll just talk to continuing resolutions in general, and then maybe get a little bit more specific about this one. In general, continuing resolutions are really not all that helpful because they delay new starts. It also slows down awards and just continuing the spend of prior year. It becomes a little more difficult. The whole process starts to slow down. If you look at this one in particular, though, at least what the House passed was really having a full year continuing resolution that really was an attempt to make it look like a full year appropriation, interestingly, because they do give flexibility to invoke new starts, as well as some flexibility to reprogram funds as well. It's a little bit of a different animal from past continuing resolutions, which I think gives us at least a little bit more, makes us a little bit more upbeat as far as really continuing forward some of the plans that we had. Look, I think when you look at it right now, the continuing resolution could put some pressure on the guide that we provided. On a top line, we said in January, 4%-5% growth. It really is, though, dependent on what type of flexibility and how they actually manage some of this flexibility they have. At the first glance, you could say maybe it puts us pressure really towards the lower end of the guide. It's really too early to make that declaration. As things pass, we'll get much better visibility into what the budget is. I think if you're going to be in a continuing resolution, this is probably the continuing resolution you'd want it to be in this type of form. Because as you mentioned, and as I mentioned, at least there's some flexibility. OK, OK. Within that flexibility, there are a couple of specific issues for Lockheed. One would be about Lot 18, where we're waiting for the definitization. I think when the UCA came out in December, the idea was that once fiscal 2025 appropriations were finalized, that UCA could be definitized. Does this continuing resolution count as appropriations that would allow the DOD to definitize that contract? Want to take it? For Lot 18, actually, my recollection was that was 2024 appropriations. That can get under contract. I see no issues to that. We're still on track to getting that done by the first half of the year. We're still working on a few outstanding items with our customer. We're on a good path to get that done. Your point is well taken, and it's true as it relates to Lot 19. That would, again, to the extent that there's some flexibility shown and they're able to provide the Lot 19 continuity, give us the upside or just really kind of keep us kind of relatively to where we were expecting for the year. Again, that remains to be seen. We would need that flexibility to be applied to Lot 19 contracting. Right. When you talk about sort of what would be required to be in the, I guess, what affects the outlook for 2025, it's really the flexibility is really most important around that Lot 19 contract? Yeah, there's others. Again, it's really around the largest material impacts to us would be new awards that we had assumed in our outlook. I won't get into specifics into what all those are. To the extent that those get pushed out, that would put some pressure on the guide, at least towards the lower end. We still feel pretty comfortable within the guide that we have today. Right. OK, OK. Excellent. I guess just while we're talking about F-35, there was some news recently about a software upgrade that was coming this summer. If you could give us an update about what is that bringing to the table? When we think about finishing the full TR-3 capability and having combat-capable aircraft, when that happens? On TR-3, where we stand right now is we're continuing to make progress on maturing the software. Really what we're doing is working on bugs for fixing system stability. For all intents and purposes, on a technical basis, the Tech Refresh 3 has been delivered. Now what we're working on is cleaning up of the system. We are simultaneously also working, actually, on Tech Block 4 capability, inserting that, which is related to a particular sensor. That's being done simultaneously. We're working on that as well. We've talked both to the customer and the Joint Program Office, as well as Lockheed Martin, have indicated that we expect combat capability this year. I would expect that we would continue to, though, provide upgrades going into 2026 as well. We think about kind of an iterative spiral type of improvement program is really what we'd be looking at. As I said in the call, on the first quarter call, and I've said, I think, subsequently to that, the declaration of combat capability is one that's really solely reserved for the customer. That is something that the Joint Program Office will work with the Air Force, the Marines, and the Navy and go through their process to determine whether the capability they have is sufficient for combat capability. We believe it will be, and as do they. We still have to progress to do that. Yeah. OK. The international side of F-35, something that's been much discussed recently, I think. Maybe this will get into some broader questions about international demand. To what extent, if there was a decision in the U.S. to cut back somewhat on the F-35, to what extent can international customers fill in the gap going forward? Maybe starting off in Lot 19, for example, can Lot 19 be about the same size as Lot 18 with international customers stepping in? When we go forward, can it be sort of like a half and half type of arrangement? Yeah, I think I would, yes, because we have sufficient really backlog in the international to help fill up any gaps for a few years to the extent that the U.S. decided they want to go down a little bit. Again, we'll have to see how that shakes out in the budgeting process. The international backlog there is sufficient really to make that up. We continue to get incredible demand. Countries, a couple of years ago, we had Canada for 88 aircraft, Germany. Romania is just another 20th customer we just announced. The international demand just continues to be pretty strong there. Yeah, we think that we can maintain a pretty level production schedule that would probably be a little bit more tilted towards international aircraft. OK. That 156 could be half-ish or maybe even a little bit more than half? It could. Yeah. OK. OK, very interesting. On the international side, when we think about growth, how do you think about international versus domestic growth? Maybe starting just with this year, 2025, and then beyond. Yeah, thanks for the question, Seth. In 2024, about 26% of our sales were from international, and our backlog about 30% of it. You can see that that kind of wants to lead to that international sales number going up. We expect that we'll get closer to that 30% of sales number by the end of the decade. There'll be kind of a consistent increase each year as we ramp to that number. 2025 would be right in line with that. Right. OK, OK. As we go forward, I'd imagine the opportunities for international sales. I mean, we look around the world, and we see defense budgets going up. I'd say we kind of think about the three regions of Europe, East Asia, and Middle East as where your major international customer sets are. Budgets are kind of going up everywhere. I'd imagine that's a positive trend as you look at sort of the opportunity set. Absolutely. In our discussions with customers, it's quite often been, we want more sooner. For the most part, particularly when you talk about missiles and fire control and munitions, where we have our highest international demand, we've just been capacity constrained. That is just a strong area. The backlog is very high there. We expect that to continue for the foreseeable future. It extends. We talked about F-35, F-16. Our backlog, there's over 120 aircraft, which is all international. Also, international demand on things like C-130s, Black Hawks as well. We're also seeing demand beyond these traditional systems and platforms in space. We've got countries that we have not historically been much of a space provider internationally. Whether it's military satellite communications, we're seeing incoming requests for those types of proposals. It is really across the portfolio where we're seeing the demand of Lockheed Martin. The other thing we've talked about in the past is the command and control systems, the battle management. We've got the AIR6500 program in Australia and just fully integrating all the capability there to provide, starting with integrated air and missile defense, but then going beyond there for really overall situational awareness for the country. We've also awarded the contract for Defense of Guam. There are a number of those types of joint ultimate command and control systems that are in play as well internationally. OK. When you think about in Europe, maybe it's early. The idea in Europe that there's going to be a need for them to develop more of their own homegrown defense industrial base, when you think about the demand in Europe over time, is there A, I imagine the answer is yes, but do you still see opportunity for Lockheed Martin? Is that weighted particularly in the near term? Is there an opportunity to maybe be a partner or co-produce or do things in Europe even as they try to develop their own indigenous capabilities? Is there a C, all of the above? OK. Yes. The reason why I say that is this really has really been probably more of a five-year journey versus just more recently. What we're finding is these countries are looking for just indigenous capability that extends to more sophisticated production capability as well as even design capability. They're looking for really joint development, joint production. It's something that we're interested in doing with these countries because it provides just a longer-term relationship. It also helps us in terms of supply chain resiliency. If we can create some duplicitous or just duplicity in the supply chain where we've got gaps, it's a win-win-win. That's the way we're looking at it a little bit more strategically, the long-term relationship. Of course, meet whatever requirements they may have, but do it in such a way where it does create a long-term relationship and also what bolsters our supply chain at the same time. OK. Excellent. Speaking of supply chain, maybe that's a good segue. You mentioned being capacity constrained in missiles and fire control. Just kind of an update on how things are going, missiles and fire control on the production ramp for the various platforms. Yeah, I mean, we're continuing to move forward. We got to our 550 rate on PAC-3. That's this year. We are now moving towards 650 by 2027. We are on our march to 14,000 for Guided Multiple Launch Rocket Systems, GMLRS. We'll do that over the next few years here as well. HIMARS, we're pretty much gone. We've gone from like 60 to 70 to 96 a year. We're pretty much there. JASSM, LRASM, we've got a couple of years to go from, say, 700-ish a year to 1,100 a year over the next few years. That is all pretty much on track. The investments are in place. We've got a brand new facility for JASSM, LRASM in Troy, Alabama. We are ramping up. Excellent. When we think about the potential for margin expansion in missiles and fire control, obviously, we'll see the nice step up this year absent the classified program charge. Once we've reset here in 2025, how do you think about the opportunity beyond as the ramp continues? I think so think about MFC. It's really around a 14% business, give or take based on the given year and based on the mix of their sales. You have to keep in mind, even though we recorded the charge on the classified program, those sales will still be recorded at a zero margin going forward. That'll put some pressure on the margins. The other thing, too, even for the legacy programs, as they go through new contracts, old contracts expire, they reset new contracts. Typically, what we'll do is we start those at a lower booking rate, and then we build up to the higher booking rate. It just doesn't call it that margin potential in that contract. You don't see it immediately. For those two reasons, you'll see kind of, again, around a 14%. Some year it'll be slightly above. Other years it'll be slightly below. I think that's a good barometer on average, around 14. Right. I think there is a perception around demand for missiles and munitions that it is tied to the war in Ukraine. I think at a high level, the Russian invasion of Ukraine kind of triggered a lot of this demand. If we were to see a ceasefire or a cutoff in U.S. support, my sense has been that that does not really interfere very much with the ramp that you guys are engaged in. Maybe you could speak to that. Yeah, we would agree that what we're finding is that not only the U.S. but other countries have determined that their stockpile levels need to be higher. For that reason, we just see a pretty long tail of this demand cycle. That's really the primary factor. It's really a reevaluation of what the stockpile levels should be and then working to achieve those levels. It'll take us some time to get there. Yeah, I mean, regardless of what happens in Ukraine in the coming months, I think of that as kind of a multi-year ramp in energy. That's right. Yes. OK. I guess maybe a segue from MFC into another topic is one of the trends that people talk about, kind of big picture trends in defense, is the idea of Affordable Mass. The company's talked recently or I read trade press stories about a low-cost cruise missile. Maybe you can tell us a little bit about the offering there and how you see that competitive landscape evolving. Yeah, you're referring to our Common Multi-Mission Truck, which can serve as a cruise missile. It can also serve as a just it's a vehicle. So it's modularized. You can put different payloads on it. It could serve as a cruise missile, as I mentioned. It also can provide an ISR type of capability depending on what sensors you want to put on it. The point of it is to really be a low-cost, highly producible unit. This one is made possible by just really our 1LMX investment. This is a born digital program. Typically for missile programs, our development cycle goes anywhere between 24-36 months. We're able to go from essentially initial design, preliminary design, to test within a year on that system. That was enabled by our model-based enterprise tools that we put in place. Typically, you do not have a traditional prime being able to move with speed. At least that is a perception. That is a good example of where we have been able to do that and position ourselves quite well. We will continue to test that system. This is with a target cost of about $150,000. Much, much lower cost. Really, it is a sweet spot for, to your point, affordable mass. It will provide a modular capability so the customer can do different things with it. We think that has a lot of utility there. We are pretty excited about bringing that forward and getting it certified and qualified. Is that something that was done sort of where the company took the initiative to develop this and now sort of find the customer set? That's correct. Yeah, we did that on our own internal investment to provide a, call it maybe a hole, if you will, in our portfolio, a product portfolio. Typically, you would associate Lockheed Martin with more exquisite systems. We talked about JASSM, LRASM, and those types of systems. Here is a, again, pretty low-cost cruise missile. Right. Also low-cost cruise missile. When we think about there's a perception or, I guess, a concern often about build it and they will come. This seems to be an example of that. Also knowing you, Jay, I know this was probably not an extravagant effort to spend a ton of money for something and build it and they will come. No, I mean. Something that's very, it was something that's pretty affordable. Are you saying I'm cheap? Maybe a little bit. Yeah, no, it's exactly right. It's taking the IRAD and really utilizing the we're making a multi-billion dollar investment in our 1LMX digital transformation in the company. This is a good outcome of utilizing those tools early on. What that does is when you accelerate schedule and you're able to start testing something and you only do it essentially half the time that you've done it in the past, you've taken a lot of cost out. It's not just a schedule, but what comes with the lower schedule or the reduced schedule is just that cost that came out. It'll be an iterative process. Just as one example, we're doing a lot of things on internal investment. We're actually ramping up our IRAD in the company in things like AI, autonomy, crewed-uncrewed teaming, and things like advanced manufacturing as well. There's a lot of exciting things happening at Lockheed Martin. Yeah. Excellent. When you do that, I guess, is there anything you'd note about kind of the structure of doing that? Is it people do that kind of within the existing sort of structures? Or are there kind of teams that are off to the side that have maybe a little bit of a different permission structure in terms of what they can do? Yeah, that's a great point. We do have that. In this case, it was within the traditional structure. The MFC team is just a great team. They're pretty agile. They know how to move with speed and start driving to an end result. We do have certain cases where we refer to it as LM Evolve, where we've got essentially separate, whether they're LLCs or C Corps or S Corps, where they go outside the infrastructure of Lockheed Martin. They have their own, we've given them their own investment capacity to go move fast and move like a commercial company. We have a couple. One is essentially an AI type. What we provide is the AI platform, the environment for you to put a large language model in there, house your data in there, and we sell that service. We've had a couple of successes with the DOD, also with commercial companies, in providing that AI environment to players. The other piece we have is we've set up our own microelectronics organization, too, which we refer to as ForwardEdge ASIC. These are a bunch of really people that worked in commercial industry that are now taking commercial practices and applying them to defense, both inside selling it internally to Lockheed Martin, but also selling it outside to other players in the defense industrial base. Those are two examples where we've just really moving a lot faster than our ordinary infrastructure would allow. Right. OK. Excellent. No, that's very interesting. I want to take a quick minute to look out to the audience. I know it's early, but anybody have any questions? If not, we'll continue from the stage here. Oh, we've got one over here. Just a quick question on that. If you have any conversation about Golden Dome, I know it's so far ahead. Just if you have any conversation on this, like what kind of capabilities you have and also how that evolves with the competition with the small tech companies in general? Yeah, you know the Golden Dome is just a significant opportunity. You think about the capabilities Lockheed Martin has. We have the capability to manage the systems architecture. We have the capability to manage the systems integration. We also have the capability to deliver component pieces of an integrated air and missile defense. I'll give you some examples. Things like PAC-3 interceptors, THAAD interceptors. We have that capability. Ground radar capability. We have a pretty robust ground radar portfolio in the company. Space assets to be able to detect missile warning and missile tracking. Also, as I mentioned before, the whole integrated systems. What we're using for Defense of Guam is what we refer to as Aegis Ashore. That's a system to be able to really manage and provide really control over the entire fire control loop. Everything that you would expect or require in an integrated air and missile defense program, even one at that large scale, we provide. We view it as really a national team because of the scale of it, that there would probably be a lot of players in this, including Lockheed Martin. Our view is that all the players should be participating as providing the best of the best capability for this system. The customer's going through and they'll have to ultimately determine exactly who owns the program and all of those type of things. We've responded to requests for information. We're pretty excited about this opportunity. We think it's the right thing to do. We think that Lockheed Martin has a significant role to play in it. Right. I mean, is it safe to say that one of the key things that's going to have to be determined is just where within DOD the authority is going to sit for this and sketching out exactly what the requirements are going to be before they can move forward? That's right. Yeah, I think that they'll kind of go through exactly where they want to house it and manage it. I think, again, to what extent they want to, if they want to manage integration and what role industry will play. That's all to be determined. Again, more to come there. Yep. Is that something where you think when the fiscal 2026 budget proposal comes out, that's something that'll be kind of a centerpiece of the proposal? Possibly. Even some of this kind of reprogram capability in 2025, the full year continuing resolution may allow for some initial work on that as well. I think the administration wants to move pretty quickly and be able to field capability during this term. I would expect there probably will be some funds allocated to that for the 2025 budget as well. OK. Yeah, I guess that gets to the question of there's a lot of confusion in recent weeks around the 8% that the secretary talked about. Maybe you can correct me if I'm wrong. My understanding is that they wanted the services and organizations within DOD to identify 8% of their budget that they could reallocate. It wasn't necessarily a cut. Right. I assume at the top of the list of what would be a beneficiary of a reallocation would be Golden Dome for America. Yep. When you think about on the negative side of the ledger, the things that are vulnerable, are there particular areas within your portfolio that you'd be concerned about? Everything that we do is national security critical. It is really hard to speculate on a particular program. Would they say, maybe we can live with a particular program with a lower level of spend on that for a few years and then ramp it back up? That is always possible. It is really hard to speculate on any specific programs there because we are driving hardware under contract and we are moving hard for a lot of these programs. The other thing that you have to keep in mind is production. You want production stability when you are in a production program. You start whipsawing production, it becomes very difficult to ramp it back up. What happens in the supply chain is that capacity then gets diverted elsewhere. When you want to come back and go back to whatever volumes you were operating at, that capacity has been consumed by something else. These are all dialogues and decisions ultimately the customer has to make because they live with a finite budget. We really do not have any insight in terms of what they would be looking at. I do not really want to speculate on that. I agree with you that Golden Dome, that some of these funds would be carved out for Golden Dome, sure. OK. Excellent. We talked a little bit before about space. It was a very interesting comment about the international side. When you think about space going forward, we all see a lot of new companies emerging who are doing things in space. It's an area that's seeing a lot of investment now. When you think about Lockheed, what are the core capabilities and the things that you want to do in space over time and the things that make best use of you guys have some scale. You have a long legacy in this domain. How do you make best use of that in a market that's becoming more where more players are emerging? Yeah. To your point, what Lockheed Martin has and I think what differentiator for us or discriminator is just our legacy of experience and mission knowledge. In those cases, in many cases, it's been in the provision of exquisite systems. Things like SBIRS, Next Gen GEO, those are types of system UOs. All these types of systems are things that we've provided in the past. We say over the last five to 10 years, you've seen a shift from exquisite more towards these lower cost, proliferated constellations that will be recapitalized every, say, five years or so versus an exquisite system that's expected to have a useful life anywhere between 10 to 15 years. We have pivoted over that period of time, over that five to 10 years. We're participating in the SDA Transport Layers, which are proliferated constellations in LEO. We are also participating in SDA Tracking Layer, which is missile warning there. We have been able to pivot with the change in space architecture. There are a number of things that are also happening in classified areas that are kind of similar where you are seeing proliferated constellations versus the large exquisites. When you look at our product portfolio and who we are, we are a systems integrator, whether it is exquisite or the proliferated constellation. We also manufacture the satellite vehicles. Whether it is a large exquisite, say the LM 2100, we are in development and on our path to qualifying our mid-size, which is our LM 400 system satellite vehicle. As you know, we purchased Terran Orbital last year, which provides us the low end, which is the smaller sets, which are all on our SDA programs. I think that the Lockheed Martin space team has done a really nice job moving with the industry. I think that their level of expertise, their mission knowledge, and experience is no less relevant now than it was five years ago. If anything, it's even more relevant really to support all of the new entrants and really provide the capability to the customer and the speed that they need. As I mentioned, obviously, you can't get into a lot of classified, but there's things that are happening in classified areas where things are moving from domain to domain and space is absorbing more mission requirements. In that case, we're kind of front and center on those capabilities. Right. Right. And certainly relevant as well for Golden Dome. Absolutely. Yes. OK. In the launch area, when do you think ULA starts to grow earnings again? How do you think about ULA longer term? Would you ever want to own all of it? Let me just talk about ULA first. This year, what we're laser focused on is getting the Vulcan certified. We believe that we're getting close to that. We've got in the backlog over 75 launches. We have a pretty good line of sight to solid growth. What I would tell you in terms of the profit growth is probably starting in 2026. We're still dealing with some cost headwinds here on the Vulcan certification in 2025. That is going to put some pressure. What I will say is that our space segment is pretty well positioned for the year, even with the headwinds that they're seeing at ULA. We feel confident in the guy that they have that's absorbing some of the pressure from ULA. I think longer term, we still think that they will be a competitive business. They will have their share of national security space launches. As you know, they were also selected on the Amazon Kuiper constellation. We see that there's opportunity for future launches there, too, beyond what we're under contract for. There is a lot of activity in space. Launch is necessary. We expect ULA to be a significant player in the future. As far as we've had dialogue with Boeing over a number of years in terms of the ownership structure, 50/50, I think we both acknowledge is probably not the most ideal because our interests aren't always aligned 100% of the time based on kind of investment decisions that ULA may need to make. For the moment, for the time being, I think we're pretty satisfied. We've got a very good relationship with Boeing as it relates to ULA. We work very well together. We're pretty aligned. You never say never on things, but it's not a burning platform at the moment. Right. OK. Very good. I wanted to ask about just when we think about bookings and we think about what's going on in Washington, not necessarily anything specifically related to Lockheed Martin, but just in terms of the level of award activity that we see out there, a lot of folks who work for the government probably have some dislocation at their jobs. Are you seeing any impact on award activity in the quarter? We have just typically for the year, usually the first half is lighter in award activity, and particularly the first quarter. This year is not really any different. We expect a lighter first half. Book to bill is likely to be less than one. We have no meaningful orders that we expected in Q1. I would not necessarily attribute that to any dislocation. I think it is much more of just the cadence and the typical way that we see things playing out as the year goes on. Cool. Very good. Let's maybe do a quick look out into the audience if we have a final one. If not, maybe just we've actually touched on a lot of, I think, really cool high-level stuff here. Just if I could slip in one rather crude cash flow question at the end. When we think about the targets that you guys had back in October, and I think at that time the 2024 guide was for about $6.2 billion, and it was to grow free cash flow dollars at, I think it was a low single-digit CAGR off of that $6.2 billion. Is that still the right way to think about it? Yeah. Yeah, I think that's definitely the target, is to grow. Again, as you point out, on the base of the $6.2 billion, which is adjusted for some of the exchanges that happened in the last second or later in the year. I will say there is still some work to do. We have another pension requirement, cash requirement in 2026 of about $1 billion. At this point, we estimate that there will be a tail and additional contributions in the years ahead as well. There are opportunities to do that. We have a very strong balance sheet. We could always use that. We're working on working capital and getting more days out of our cash conversion cycle. There are things that are still being solutioned, still some work to do. We have that as our target, as low single-digit growth off of that $6.2 billion. I will also just point out we do have a track record of continuing to return cash to shareholders, $3 billion plus of dividends, another $3 billion of share repurchases this year. That we feel very confident in and expect to continue that as well. Just maybe a little plug, just keep in mind this year's guide is high single-digit absolute free cash flow generation, so growth. We are definitely on the right path. OK. Excellent. Very good. We're over time, so let's leave it here. Jay, Maria, Chris, thanks very much for being here. We really appreciate it. Thank you, Seth, and thank you for having Lockheed Martin here.