Lockheed Martin at Sanford Bernstein Conference

posted in: Notes | 0

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

Focusing on international with US slow

“what we’ve been focused on as a leadership team is to continue to grow our international business. It’s always been an element of our strategy, but in this environment we’ve stepped up our focused on that from a leadership standpoint and resources, because there is a strong demand for our products and capabilities internationally and because it is an area of growth for us.”

f-35 is 16% of sales

” From Lockheed Martin standpoint, I would tell you that having the F-35 well supported in both the House and Senate and by our customer I think is very important. It’s 16% of our sales. ”

Something needs to be done about sequestration again in 2015 2016

“What will happen beyond FY ’14 and ’15 once we get through this budget cycle on ’15 and to ’16 is we have an uncertain situation, Doug, because that is when sequestration would come back into place unless Congress does something about that. Everyone I speak to says they want to do something about that. So my optimism says, hopefully they’ll get together and they will do something about that. We may still see some cuts in FY ’16 and beyond, but not at the sequestration level.”

International tensions get international governments attention on defense

“the tensions in Ukraine and the aggressiveness with Russia there, as you mentioned the South China Sea and the tensions over there, the North Korean’s and their unstable behavior, just different reach and it continues in the Middle East to be a dangerous neighborhood and a lot of tensions that arrived there.

All of those things say to us as a nation and to our allies around the world that while we have budget pressures that a number one thing that any nation has to do is to be focused on their national security. And so as you deal with budget pressures, each one of these nations I speak to say, but we still have to address the national security strategy that we have to protect our citizens and to provide them with the essential services that they need. And we’ve got to figure out how to manage that budget.”

Long cycle between contract and delivery

“So that backlog is if you look at our business, the predominance of our business are long-cycle businesses. We build aircraft, satellites, things that from the time we get the order, the contracts sign to the time that we actually deliver is three years, some times three years plus.”

Have sold 4600 F-16s

“But on the F-35, itself, what we envision is that it’s going to go the way of other tactical aircraft programs, such as the F-16. Today the program of record is around 3,000 aircraft. The F-16 we’ve sold 4,600. We’re still selling more.”

International focused on missile defense, f-16 and cyber security

“There is a strong demand for missile defense around the world.”

“the venerable F-16 is still selling around the world. We have backlog to 2017 and we expect to continue to sell it beyond that.”

“There is growth in cyber security. It’s a largest threat for many countries right now, it’s the cyber threat and they need help. And we have the capabilities to help them.”

Going rate for missile defense system is $3-$5 B

“And then Poland has a $5 billion opportunity, the Polish Shield they call it, but this is the Shield of Poland opportunity for their missile defense system and we are in the down select on that opportunity. ”

Cyber security at $1B right now, expanding commercially too

“And in that business, we are growing at about right now it’s around $1 billion worth of sales in that business. We are even moving into supporting commercial customers there, because a lot of large companies, whether they are utilities or they are banks, in the financial side or in other critical infrastructure, they need help in protecting their systems, just like we’ve been able to protect our systems.”

Commercial is not necessarily the same market as government

“you’re right to say there are differences. And we never go into a new market unless we know what we’re doing. We know the product line. We know exactly what we are offering. If we have to go to market differently, we hire talent to support that. We do the right things, so that we go to market appropriately.”