James D. Taiclet
Chairman, President and Chief Executive Officer at Lockheed Martin
Thanks, Greg. Good morning, everyone, and I hope you've had a good start to the new year. Thank you for joining us on our fourth quarter 2021 earnings call as we review our results, key business area accomplishments, and our outlook for 2022. I'll begin with an update regarding our proposed acquisition of Aerojet Rocketdyne Holdings. As disclosed in our earnings release this morning, we thought it highly likely that the FTC would sue to block the transaction. Since that time, we have received notification from the FTC that they have in fact authorized filing a lawsuit. We will review the lawsuit and evaluate all of our options. With the filing of the suit, we may elect to defend the lawsuit or terminate the merger agreement.
Moving on to our financial results. In a few minutes John will discuss our financials in detail and provide our outlook for 2022, but I first would like to begin with a few highlights from the quarter and the year. In October, after we concluded our financial planning process, we established an updated forecast for 2021, which we achieved or exceeded. We met our $67 billion sales forecast, and our segment operating profit and earnings per share both exceeded our projections. Our cash from operations was exceptionally strong, over $9.2 billion, supporting our disciplined and dynamic capital allocation process.
During the year we made significant investments in our signature platforms and systems as well as emerging technologies, all to meet the rapidly-evolving challenges as we see every day in the news now, the challenges that our customers are facing and to support future growth for the benefit of our shareholders. Moreover, we continue reshaping and modernizing our operations to increase efficiencies and reduce costs so we can deliver affordable solutions for our customers going forward as well.
During 2021, we spent $1.5 billion on independent research and development, a new high-water mark for the company. Notable areas of our IR&D efforts included hypersonics, directed energy, and artificial intelligence. We also initiated the development of mission-based technology roadmaps and advanced our 5G.MIL architecture to truly enable joint all-domain operations across multiple platforms, U.S. military services, and allies. These investments position the company to meet our customers' most critical needs well into the future.
During the year, we also spent $1.5 billion on capital expenditures, focused on addressing customers' program requirements and supporting our organic growth outlook. Significant capital projects included the introduction of three new state-of-the-art factories of the future, additional adoption of cutting-edge software and hardware solutions to enable model-based engineering throughout the company, and the establishment of production facilities to support our key hypersonics programs.
During the fourth quarter, we brought many of these elements together for the opening of an intelligent, advanced hypersonic strike production facility in Courtland, Alabama, supporting both our missiles and fire control and space hypersonic programs. This facility integrates critical digital transformation advancements, such as robotic thermal protection capabilities, into our manufacturing operations and represents our long-term investment in this critical technology. The Courtland facility joins our new Spacecraft Test, Assembly and Resource Center in Titusville, Florida, and our recently-opened 215,000 square foot advanced manufacturing facility in our Skunk Works organization in Palmdale, California. Together these facilities add to our intelligent factory framework, digitally linking sites and assets across the enterprise, to speed production, provide cost efficiencies, and drive future margin improvements throughout the company.
From a capital return perspective, during the quarter we executed a $2 billion accelerated share repurchase program and thereby retired nearly 6 million shares under that agreement. This brought our total 2021 repurchase amount to over $4 billion, which when coupled with our strong dividend payments resulted in a total of $7 billion of cash returned to our shareholders during the year. We will continue to be opportunistic with share repurchases and expect to utilize our remaining $4 billion authorization in 2022.
I'll now touch briefly on the Department of Defense budgets. This quarter Congress passed a fiscal year 2022 National Defense Authorization Act with strong bipartisan support in both the house and senate. The NDAA policy bill was subsequently signed into law by President Biden. This legislation authorizes a $25 billion increase for the Department of Defense for a total of approximately $740 billion for defense programs and raises the investment accounts approximately 8% above the President's originally requested amounts. Currently, the DOD is operating under a continuing resolution through February 18 for FY 2022. As Congress continues the appropriations process, we believe our programs are well supported, reflecting the fact that our portfolio is aligned with affordably delivering our customers national security capabilities.
Turning now to our growth strategy. Last quarter we discussed our long-term expectations, which anticipate that our sales will increase by approximately 2% in 2023 with steadily increasing sales growth through 2026. As we discussed in October, the four primary areas that underpin this longer-term growth forecast are programs of record, classified activities, hypersonics, and new business awards. Expansion in our program of records is a clear key pillar of our long-term growth strategy, and this quarter we were pleased to see two new customers select our signature programs to support their national security objectives.
Last month the Government of Finland selected the F-35 Joint Strike Fighter as the winning entry in their HX Fighter Program competition, citing the aircraft's affordability as well as its combat, reconnaissance, and survival capabilities as best suited to deliver on the HX requirements. This announcement for 64 conventional takeoff and landing stealth fighters has a potential contract value of over $9 billion and follows Switzerland's decision to purchase 36 F-35s. These announcements highlight the momentum that is building in this program with future international opportunities in Canada and elsewhere still in front of us.
Our Rotary and Mission Systems team also secured an important international opportunity this past quarter as the Israeli Air Force signed a Letter of Acceptance with the United States government to pursue the Sikorsky CH-53K King Stallion heavy-lift helicopter. This agreement enables the Israeli Air Force to procure 12 53Ks with the option to buy another half dozen. If fully exercised, those options could exceed $2 billion in value. Israel would then be our first international CH-53K customer as they look to replace their current fleet of legacy Sikorsky CH-53 helicopters which have been flying over 50 years.
Another pillar of our long-term growth strategy, our classified activities, also saw momentum build in the fourth quarter. Our space business area was awarded a contract by the U.S. Air Force to develop and classify and fly a prototype IR payloads in space. Our solution leverages ongoing internal investments on our LM 400 satellite bus providing greater mission flexibility and longer duration orbit life. This award for initial engineering contract includes options to deliver an operational system with the potential for this to grow into a new franchise program down the road.
And on a final note, 2021 presented a challenging environment for both commercial and defense industries, especially in terms of continuing COVID-19 effects and supply chain impacts. Our teams in all four Lockheed Martin business areas and across our corporate functions banded together and did a tremendous job maintaining our production operations and advancing science and engineering on behalf of our customers. I'm extremely proud of the perseverance and dedication of our entire organization, and I know that as one Lockheed Martin, we're going to drive future growth into our business and advance our vision to accelerate 21st century digital world technologies into our national defense enterprise.
And with that, I'll turn the call over to John and join you later to answer your questions.
