Lockheed Martin Corporation

Good day and welcome everyone to the Lockheed Martin Third Quarter 2025 Earnings Results Conference Call. Today's call is being recorded. If you would like to ask a question, please press star then one now. At this time for opening remarks and introductions, I would like to turn the call over to Maria Richard-Own, Vice President, Treasurer and Investor Relations. Please go ahead.

Thank you, Sarah, and good morning. I'd like to welcome everyone to our Third Quarter 2025 Earnings Conference Call. Joining me today on the call are Jim Taklett, our chairman, president, and chief executive officer, and Evan Scott, our chief financial officer. 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 laws. Actual results may differ materially from those projected in the forward-looking statements. Please see Lockheed Martin's SEC filings, including our 2024 annual report on Form 10-K, and subsequent quarterly reports on Form 10-Q for a description of some of the factors that may cause actual results to differ materially from those in the forward-looking statements. We have posted charts on our website today that we plan to address during the call to supplement our comments. These charts also include information regarding non-GAAP measures that may be used in today's call. Please access our website at www.lockiemartin.com and click on the Investor Relations link to view and follow the charts. With that, I will turn the call over to Jim.

Thanks, Maria. Good morning, everyone, and thank you for joining us on our third quarter 2025 earnings call. Lockheed Martin delivered strong operational and financial performance across all four of our business areas in the quarter. We secured a number of significant wins across a range of our marquee programs that drove our backlog to a record high of $179 billion. Our relentless attention to operational execution in every facet of our business resulted in elevated sales growth and substantial cash generation as well. Meanwhile, we're also positioning the company for what we see as even greater demand for the iconic Lockheed Martin products and systems needed by the U.S. and its allies to ensure deterrence from potential great power-arm conflict. As I have said, Lockheed Martin is in the aerospace and defense industry but in the deterrence business. We are in active discussions with our customers in both the U.S. and abroad on scaling up development and production of the essential elements to deliver on the goal of peace through strength. These systems include air defense radars and missiles, space-based interceptors, state-of-the-art open architecture command and control systems, and the world's most advanced fighter aircraft as just a few examples. In every step of the way, we remain highly focused on enhancing program performance in terms of cost, quality, and schedule, while reducing risk through internal production systems modernization and continuous improvement methods. As noted, in the third quarter, we've retrieved record backlog of $179 billion as demand for our reliable, advanced solutions remains solid. Multi-year awards on PAC-3, JASM-Lorasm, and CH-53K totaled $30 billion in the quarter, and provide production rate visibility into the next decade. And shortly after the conclusion of the quarter, we definitized the F-35 Lot 18 and 19 contract with the Department of War's Joint Program Office, adding $11 billion of contract value and another 151 aircraft into backlog. Our financial results in the third quarter reflect these trends. Sales increased 9% year-over-year and a solid 5% normalized for the lot 18-19 impact in last year's third quarter. We generated a strong free cash flow of over $3 billion in the quarter, enabling our commitment to further invest in the business while simultaneously driving returns to shareholders through recurring dividends and our disciplined share repurchase programs. Earlier in October, our board approved a 5% increase in our quarterly dividend and increased our share repurchase authorization. This marks the 23rd consecutive year of dividend increase for the company and demonstrates our continued confidence in Lockheed Martin's stable financial performance. Looking forward, we are updating our outlook for the remainder of 2025, increasing expectations for sales, segment operating profit, and earnings for shares. We remain focused on operational performance and capitalizing on the unprecedented demand cycle to deliver mid-single-digit top-line growth in 2025 while generating $6.6 billion of free cash flow. Evan will provide additional detail on the free cash flow elements and our full-year outlook in his prepared remarks. Circling back to the new business we secured this quarter, at Missiles and Fire Control, our expertise in developing and producing reliable precision strike weapons and integrated air and missile defense solutions at scale continues to be highly valued by our customers. First on PAC-3, the U.S. Army awarded Lockheed Martin a $9.8 billion contract for the production of nearly 2,000 PAC-3 MSE interceptors and associated hardware. This marks the largest contract in MFC history and demonstrates the sustained demand for this advanced and proven interceptor from U.S. and international partners, some of which you've read as late as this week in the press. Our teams continue to proactively partner with suppliers and customers to invest in PAC-3 capabilities and production capacity to support the elevated and enduring demand we see for this critical mission. defending against ballistic, cruise, hypersonic, and airborne threats. Next, on Jasmine-Lorasm, we definitized a large lot procurement contract for $9.5 billion with the U.S. Air Force and Navy customers. This multi-year award supports increased production quantities of these proven cruise missile systems and helps build a more resilient industrial base. We look forward to partnering with the U.S. government to execute and deliver this long-range, highly survivable and effective capability to our airmen, sailors, and Marines for years to come. Moving to rotary and mission systems, the U.S. Navy awarded Sikorsky a $10.9 billion multi-year contract to build up to 99 CH-53K King Stallion helicopters for the U.S. Marine Corps over five years. This is the largest quantity order to date for that aircraft and the largest contract award ever in RMS history. This ensures consistent deliveries of America's most powerful heavy-lift helicopter into the next decade and enables long-term affordability, optimized production efficiency, and stability for our supply chain. In our space portfolio, we received additional contract value and funding on the Next Generation Interceptor Program in the quarter, helping to increase backlog for our space business to a new high of $38 billion. With NGI, we continue to advance the program as we progress through development and begin preparing for production. In addition, our space team secured multiple contract research and development awards this quarter. These crowd awards, as they're known, demonstrate our ability to co-invest with the government partners and accelerate the delivery of revolutionary solutions, with each crowd initiative strategically targeted to support key missions for the U.S. government. Also of note in the quarter, the Fleet Ballistic Missile, or FBM system, conducted yet another successful flight test, demonstrating its continued readiness to provide the world's most potent and survivable nuclear deterrent. This also marks 70 years of Lockheed Martin support to the U.S. Navy on this critical program. Going forward, both NGI and FBM will benefit from the internal investment we are making in new state-of-the-art facilities to enable rapid, reliable, and cost-effective component production and assembly for these crucial systems. All in, these awards underscore the trust and confidence that our customers place in us, and which in turn underpins our company's long-term solid growth prospects. Shifting gears to F-35, during the third quarter we delivered 46 aircraft, and now expect between 175 and 190 deliveries in 2025. That's essentially one aircraft delivery every working day of the year. Since program inception, we've delivered over 1,200 F-35 aircraft that have amassed over 1 million flight hours, providing control of the sky and seamless interoperability between U.S. and allied forces. The recent LOT 18 and 19 award reemphasizes the growing demand for the F-35, which is the world's most advanced fighter jet currently in production. Over the years to come, the U.S. and 19 international allies will continue to progress toward a planned global fleet of over 3,500 aircraft. Moreover, we finalized the $15 billion air vehicle sustainment contract with the Joint Program Office. The four-year deal provides for aftermarket activities such as spare parts provisioning, maintenance, repair, and other support services through 2028. This long-term agreement will support our key objective to improve the readiness of the aircraft fleet as it continues to expand in number and supports the revenue growth trajectory for our F-35 sustainment business. Finally, we are also heavily committed to support the ongoing modernization and upgrade of the aircraft's capabilities. particularly the introduction of what's known as Block 4 enhancements to a number of aircraft systems. At the same time, Lockheed Martin has already moved out on engineering analysis at my direction to design and bring even more advanced capabilities from our sixth-generation research and development efforts that we conducted our Skunk Works operation in California. We are aspiring to enhance the relevance and capability of our fifth-generation platforms the F-35 and the F-22, to provide the greatest aggregate level of air superiority capability at the most efficient cost and the fastest deployment. This is a total best value approach that we think will be best for the department. To that end, we are working closely with our customers to align our internal investments with their most important mission priorities for the F-35. For example, of these strategic enhancements could include advanced and expanded weapons compatibility, improved data links, autonomous drone wingman integration, superior sensors, and the latest electronic warfare capabilities. Now, turning to the budget, we're all watching Congress work through the FY26 appropriation bills and the government shutdowns. We continue to see broad support through all of this for national defense priorities given the unsettled geopolitical situation. The strength of our backlog reflects the importance of Lockheed Martin's systems in deterring global conflict. We will continue to partner with the administration, Congress, and our customers to provide the absolute best defense technologies as this budget process is finalized. The Homeland Defense mission, including Golden Dome for America, is one opportunity for which Lockheed Martin is ready and well-positioned with existing products, expertise, and production capabilities. Although details of the initiative's architecture and acquisition plan continue to take shape, the space domain is expected to play a vital role, and Lockheed Martin continues to make significant progress to advance space-based defense. Earlier this quarter, the first next-gen geo, or NGC, GE missile warning system satellite was successfully completed. It's finished environmental testing. It's on track to provide the next level of global surveillance and detection of missile threats from space. We also submitted proposals for space-based interceptors and other emerging technologies, and we're actually planning for a real on-orbit space-based interceptor demonstration by 2028. Further, led by RMS, Lockheed Martin has built a prototyping environment at our Center for Innovation in Virginia to support the collaborative development of a Golden Dome for America command and control capability. Through a series of demonstrations, Lockheed Martin's open systems architecture is already fusing existing and new C2 capabilities from seabed to space. And importantly, these capabilities are not limited to our own. We have a broad team of industry partners that are participating in the prototype system development, ensuring that the US government has access to the best available solution for each element of the eventual Golden Dome command and control system. At the same time, we're rapidly increasing production capacity across the missiles, sensors, battle management systems, and satellite integration opportunities that will be directly relevant to achieve the overarching objective of Golden Dome, and that is to strengthen deterrence against an attack against the U.S. homeland, and if necessary, defeat it. I'll now turn it over to Evan to share more about our financial results before we open up the call to your questions.