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Date: October 22, 2024

Overall Performance:

Lockheed Martin delivered solid Q3 2024 results, demonstrating operational and strategic progress. Key highlights include:

* Record backlog exceeding $165 billion, reflecting strong demand for their products and services.

* 48 F-35 deliveries, showcasing their commitment to meeting customer demands.

* Increased production on critical missile programs like GMLRS and LRASM, addressing evolving security threats.

* Strong free cash flow generation of $2.1 billion, enabling investments in growth and shareholder returns.

Sources: Press Release, Consolidated Statement of Earnings

Financial Highlights:

* Net sales reached $17.1 billion, a 1% increase year-over-year, driven by growth in Missiles and Fire Control, and Rotary and Mission Systems segments.

* Net earnings were $1.6 billion, or $6.80 per share, slightly lower than Q3 2023 due to the F-35 Lots 18-19 contract delay.

* Cash from operations was $2.4 billion, with free cash flow of $2.1 billion.

* The company returned $1.6 billion to shareholders through dividends and share repurchases.

Key Strategic Initiatives:

Lockheed Martin is focused on its 21st Century Security® strategy, emphasizing:

* Strengthening Production Resiliency and Scalability: Investing in their production system to ensure consistent delivery and responsiveness to customer needs.

* Accelerating Technological Innovation: Integrating cutting-edge digital and physical technologies across their mission solutions and internal operations.

* Expanding International Partnerships: Broadening production capacity and driving international sales by forging strategic alliances.

Challenges and Opportunities:

* F-35 Lots 18-19 Contract Delay: Ongoing negotiations with the U.S. Government on this critical contract are impacting revenue recognition, profitability, and cash flow. The company expects resolution in Q4 2024.

* Global Security Landscape: The evolving geopolitical environment, marked by heightened tensions and increased defense spending globally, presents both risks and opportunities for Lockheed Martin.

Outlook:

Based on strong year-to-date performance and anticipated resolution of the F-35 Lots 18-19 contract, Lockheed Martin raised its 2024 financial outlook:

* Net sales are projected to be ~$71.25 billion, up from the previous range of $70.5 - $71.5 billion.

* Segment operating profit is expected to be ~$7.475 billion.

* Diluted earnings per share are estimated to be ~$26.65.

* Free cash flow is anticipated to be ~$6.2 billion.

Quote from CEO Jim Taiclet:

"In the third quarter, we advanced our strategic, operational and financial priorities, as demonstrated by our record backlog of more than $165 billion, 48 F-35 deliveries, increased production on missile programs, and $2.1 billion of free cash flow generation."

Key Takeaways:

* Lockheed Martin continues to deliver strong financial and operational results, fueled by robust demand for its products and services.

* The F-35 Lots 18-19 contract delay poses a near-term challenge, but the company expects resolution in Q4 2024.

* The company is well-positioned to capitalize on the evolving global security landscape, with a strong focus on innovation and strategic partnerships.

* Shareholder value creation remains a priority, demonstrated by increased dividends and share repurchases.

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