Jim Taiclet
Chairman, President and Chief Executive Officer at Lockheed Martin
Thank you. Thanks, Maria. Good morning, everyone, and thank you for joining us on our 4th-quarter and full-year 2024 earnings call. As you saw in the press release this morning, our return to growth strategy that we implemented three years ago is well on its way and remains on a strong trajectory. In 2024, sales grew 5% year-over-year and our backlog of $176 billion reached yet another record, demonstrating the enduring global demand for our superior, scalable and reliable products and systems. Each and every one of our four business areas saw backlog growth and ended the year with a book-to-bill ratio of greater than 1. We fully expect these positive trends to continue in our 2025 outlook with mid-single-digit growth in sales, segment operating profit returning to 11% and double-digit growth in free-cash flow per share. Jay and Maria will cover the financials in more detail, but I'd like to briefly comment on the earnings impact in the 4th-quarter of two classified programs at MFC and Aeronautics, respectively. Recording charges in Q4 on these two programs enabled us to derisk the financial profile of both these critical national security programs going-forward as we move into their next phases. While these particular contracts were struck a number of years ago, there are no longer any must-win competitions. Under today's Lockheed Martin-wide bid process, every proposal adheres to a stringent risk-adjusted ROI regime. This process is designed to compete aggressively for key opportunities, while also being very committed to achieving positive results, both in the short and long-term for our shareholders. Thank you at the same time, we are committed to ongoing investment in the business to further enhance our company's growth trajectory, having successfully executed our return to growth initiative over the past few years. In 2024, we invested $3.3 billion in research and development and capital to support advanced scalable technology solutions for our customers. Equally important, looking-forward, our investments to enhance the attractiveness and performance of our key programs and initiatives such as America's preeminent fifth-generation fighter, the F-35 and our internal digital transformation 1LMX are expected to grow. Our financial focus remains on free-cash flow and free-cash flow per share. First, our company continued to deploy significant free-cash flow-in 2024 and we've returned greater than 100% of that free-cash flow to you to shareholders. In addition to our consistent and healthy dividend, we maintain a robust share repurchase program with $3.7 billion of shares repurchased in 2024. Turning to the F-35, we delivered 62 aircraft in the quarter, bringing our total deliveries for 2024 to 110, the high-end of our expected range. These deliveries included aircraft that were previously parked and new jets that rolled-off the production line. We continue to expect deliveries will exceed the production rate over the next few years and estimate 170 to 190 F-35 aircraft deliveries in 2025. TR3 capabilities continue to progress in-flight testing. We completed qualification testing on a set of key TR3 capabilities in 2024 and we're making solid progress on system performance and remaining TR3 deliverables. We expect to release additional capability this year with further upgrades to follow. Thank you. In addition, the undefinitized contract for Lot 18 F-35 production was awarded in December, bringing our backlog to 408 aircraft. We expect this contract will be definitized during the first-half of 2025. We welcomed our 20th global customer, Romania into the F-35 enterprise in November with its letter of offer and acceptance to procure 32 aircraft. The Romanian Air Force's F-35s will integrate with their existing F-16 fleets as well as other Allied F-35s, highlighting the importance of the superior capabilities of this aircraft. Moreover, the F-35's seamless interoperability using our 5G.mill architecture will be crucial in establishing and maintaining command of the air, especially in the Indo-Pacific, European and Middle Eastern theaters. Lockheed Martin's system of integration expertise across land, air, sea, space and cyber are essential to continually improving many important national security missions, such as protection from air and missile attacks. In this example, our defensive Guam flight experimentation mission in December successfully demonstrated the integration of multiple Lockheed Martin and other OEM products into a single combined weapon system. Our Aegis Guam system was successful in acquiring and tracking targets using our TPY6 radar, planning and conducting the missile engagement using our Aegis combat system. Then we fired the interceptor from one of our vertical launching systems and ultimately destroyed the incoming weapons. Equally important was the accelerated pace from contact award to successful completion of this flight test mission in under two years and was a direct result of leveraging prior investments in all these proven technologies. Building on our production-ready Air Launch Rapid response weapon or ARO, America's hypersonics technology made another important milestone in the development of one of our most important and advanced weapon systems in December. The US Army and US Navy completed a successful end-to-end flight test of the common hypersonic All Up Round, the first live fire event for the long-range hypersonic weapons system. I'd like to shift gears now to current discourse about the defense industry landscape. Much has been said about Defense Primes, emerging start-ups, traditional and non-traditional companies. I see us all working together and I think that its industry's role to help Marshall the talent and expertise in our country to provide the best possible deterrent capabilities with both physical products such as ships, aircraft and satellites as well as digital advanced technologies. We need to access the best talent, financial resources and technologies from both the aerospace and defense and commercial sectors to get ahead and stay ahead. To that end, on the commercial front, I've long been an advocate of deepening partnerships across industries. And we have done so with companies such as NVIDIA for artificial intelligence, Meta and IBM for large language models to more efficiently generate code, analyze data and enhance business processes, Verizon for 5G networks, Microsoftware classified cloud modeling and simulation and Intel and Global foundries for advanced military hardened chips. We're also investing heavily on internal development autonomy, AI and other enabling digital technologies to provide the best solutions for our customers. Skunforce continues to drive the cutting-edge theater level security solutions. In real-time live fly demonstrations, we had flying from our facility in Fort Worth, Texas sharing classified data by a Skunk Works open system gateway through a commercial satellite communications and all the way over into a Royal Air Force lab in Farnboro, UK where it was integrated into their command and control system. This achievement marks a significant step toward a future integrated defense, enhancing our F-35 interoperability in Real-time with an allied C2 system using our 5G.mill architecture. In another first, our Lockheed Martin Skunk Works team, along with the US Navy and General Atomics, completed a live-controlled flight demonstration of an uncrewed system by the command carrier aviation mission control station, which was powered by our autonomy platform. This demonstration is a pathfinder that helps advance the complex technology necessary to enable human-machine teaming as envisioned for autonomous systems. We're doing it right now. Turning to the budget, the current continuing resolution funds US government operations through March. We look-forward to working with the returning administration to continue pursuing a more agile and streamlined acquisition process that encourages speed, technology innovation and broader participation. We see Doge as an opportunity to make great progress in all these areas. And we will continue to share ideas and do our part to support efforts to eliminate unnecessary regulatory hurdles while working to increase efficiency in our own internal operations through our OneLMX digital transformation. Now, I'll turn it over to Jay.
