Lockheed Martin (LMT) Q2 2017 Earnings Call

Bruce Tanner – CFO

Positive book bill for international orders. 

“we still think we’ve got a chance to end the year potentially at around $100 billion of backlog if some of these, especially the Kingdom of Saudi Arabia orders come in this year, as opposed to next year. But even without that, 95 to 100 is probably what we’re expecting…So a positive book to bill. “

Upcoming changes in the revenue recognition principle may not have a signficant impact 

“we’re kind of I’ll say running rev-rec in addition to the normal methodology for the first quarter and second quarter….But so far everything is indicating that you would think we should see a whole lot of difference. And part of the reason for that is a lot of the units of delivery are what we call POT, Passage on Title transfer where we essentially record sales upon delivery…We don’t see a large drop off or a large increase or decrease in our POT deliveries there. most importantly on our rev-rec, F-35 is not – does not change one bit and that’s obviously the biggest driver of Aeronautics and for that matter, sales for the corporation.”

The Boeing (BA) Q1 2017

Dennis A. Muilenburg – President and CEO

Airline activity is picking up. 

“…we still see solid airline profitability and strong passenger traffic that continues to outpace global GDP. According to the International Air Transport Association, the 8.8% year to date passenger traffic growth adjusted for the leap year is well above the long-term average of 5.5%. And with the recovery in global trade, we are now seeing modest improvements in cargo traffic.These favorable industry trends, combined with our robust backlog of more than 5,700 aircraft, underpin our planned production rate increases over the remainder of this decade.”

Passenger traffic picking up

“…we’re continuing to see strong passenger traffic growth in particular. It’s only one quarter, but 8.8% passenger growth in the first quarter this year, again just speaks to the fundamental strength of the marketplace.”

On defense spending

“…we’re seeing a flat to moderately up top line on the defense business over the next five years. Some of this is dependent on where we end up on the U.S. defense budget. As you know, we’re still under sequestration. It’s the law of the land, and we’re hopeful and there’s some signs that alternatives to sequestration are going to come through as the new baseline…. what we’re hearing from our customers and what we’re seeing from the new administration and from the Hill are encouraging signs in terms of adding robustness to the defense budget and selectively growing

Gregory D. Smith – CFO

On tax reform

“….we don’t have any cash offshore, other than cash that supports our operations. So we’re not in a situation where repatriation is an issue or a priority. Broadly speaking, we’re a supporter of tax reform. And simplifying the tax code, as well as getting the rate to a point of being able to compete on a global scale, is certainly something that we support. And again, we’re looking for efficiency in the tax system as well as the rate….But at the highest level, we’re a big supporter of tax reform. It’s going to drive jobs. It’s going to drive the U.S. economy, broadly speaking. And it’s going to allow us to compete in any, whether – doesn’t matter what industry you’re in. If you’re a global company, it’s going to allow you to compete on a global platform.”

Lockheed Martin (LMT) Q1 2017

Marillyn A. Hewson – President and CEO

They hope for increased defense spending

“At this time, government spending remains limited by the continuing resolution that is set to expire on April 28. As you know, the continuing resolution, or CR, limits funding to prior year’s levels and prohibits new programs from starting. Discussions are underway to extend the CR as Congress continues to debate the regular appropriations bills. We are hopeful that these discussions result in an approved FY 2017 Defense Appropriations Act as we feel a further lack of budget clarity could have longer-term consequences for our armed forces and our industry..”

…and the hope seems justified

“There are however, several encouraging indications that our nation’s leaders are aligned with the need for a focus on defense spending. First, the House recently passed the FY 2017 appropriations bill, and it is currently residing with the Senate. This bill…supports vital equipment procurement, with increased spending called out for BLACK HAWK helicopters, as well as additional F-35s. Similarly, we are pleased to see President Trump’s 2017 supplemental defense appropriations submission and the administration’s initial FY 2018 budget outline, or skinny budget; both request funds in excess of the Budget Control Act caps.”

 

 

Bruce L. Tanner – Executive Vice President and Chief Financial Officer

In sum

“Our first quarter performance was mixed with a couple of earnings charges detracting from strong performance elsewhere in the business. Our cash performance was strong in the quarter and we expect that performance to carry over to a higher full year outlook than we provided last quarter. We continue to provide significant cash returns to our stockholders and we’re not giving up on trying to overcome our early setbacks and making 2017 a year we can be proud of .”

Due to product lifecycle, the CR will have delayed impact

“…the work that we’re performing today was from several fiscal years ago. It takes about three years or so to go through the F-35 lifecycle from sort of the initial dollar award to the first aircraft delivery. So, as Marillyn said, I wouldn’t expect to see, especially in 2017, much of an impact, if anything, even should CR be extended.”

On the new revenue recognition standard

“…(the) revenue recognition standard that becomes effective January 1, 2018…I’m starting to get insight into sort of rev rec the old way, if you will, and rev rec the new way. Our expectation and what we’ve disclosed in the Ks and the Qs is that we wouldn’t expect to see a large change relative to our sales and/or earnings even though we are going to be changing some contracts that are currently on a delivery-based or what we call units-of-delivery-based method of sales recognition to a cost-to-cost methodology. So that will have some impacts on sort of our opening balance sheet under the new rev rec approach, as well as sort of our opening backlog position, but I wouldn’t think the sort of the run rate if you will, of sales and earnings going forward would be a material difference at all and that’s sort of what I’m seeing as I look at the data so far.”

Lockheed Martin 4Q16 Earnings Call Notes

Marillyn Hewson

Current status of DOD budget

“I’d like to turn now to the status of DOD budget. Currently, the DOD is operating under a continuing resolution through April 28th for fiscal year 2017 with funding constrained to prior FY16 levels. While this will cause funds to be limited for certain DOD programs and likely delay expansion in others, we do not believe our 2017 sales, earnings or cash flows will be affected by this delay in receiving the full appropriations bill”

Recognition from both parties that global security threats are not decreasing

“Separately, the 2017 National Defense Authorization Act was signed into law last month and reflected bipartisan agreement that defense budgets should not return to amounts defined by the Budget Control Act or sequestration levels. I am personally encouraged by that fact, but there is recognition from both parties that global security threats are not decreasing and that in fact we do need to continue to put resources toward our national security and our interoperability with our allies around the world.”

Not seeing any change in international customers due to new admin

“In terms of other international customers and any reaction to the change administration. I frankly haven’t had any dialogue back from that as well. We — as we bring in — as we have an orderly transition of power in the United States of America, we have new leaders in the administration, they each — they have different policies they might put forward, but it hasn’t impacted our demand for our international products, a lot of our growth on international — in the international marketplaces in the F-35, it’s in missile defense, it’s an opportunity for F-16 and C-130J, opportunities for C4ISR, Space awareness, things of that nature and that continue — there continues to be a demand for those.”

Met with Trump about F-35, welcome the opportunity to speak

“Basically President Trump recognizes that the F-35 is a very large program, its largest program in the Department of Defense. He wants to make sure that that the American taxpayer is getting the lowest possible costs on the program and we share, we understand his concerns about affordability, we certainly share that. The meetings that we’ve had have been very productive, with very good dialogue. He asked excellent questions and he is really focused on making sure that that the cost comes down on the program and it is not about slashing our profit, it’s not about our margins when we have those discussions about how we get the cost of the aircraft down today and in the future. So I have welcome the opportunity to talk to him, because it gives me an opportunity to share with him what we have been doing in terms of bringing the cost down as you saw on the chart that we put in our deck today that we have been driving the cost down on the program that we have invested as ourselves and our industry partners in what’s called blueprint for affordability and we’re moving forward on sustainment cost reduction initiatives”

There appears to be bipartisan support for eliminating sequestration

“My opinion is though that there’s appears to be bipartisan support for eliminating sequestration. As I’ve said in the past, we have a lot of independent dialogues with various members of Congress, every one I’ve ever spoken to [Technical Difficulty] they don’t think it’s good policy and they want to get rid of it. So I think now with the current Congress and the new administration that it probably opens up the opportunity for really getting that done and I’m very encouraged that the dialogue has been around eliminating the defense sequester, just removing it altogether and there’s also a strong discussion around increasing defense spending, because we have for the last few years allowed our — with that budget caps et cetera, we have not been investing like we need to in recapitalization and then and readiness and a lot of things that you hit directly from our customers, our services telling Congress and telling the new administration that they need.”

Raytheon 3Q16 Earnings Call Notes

Raytheon (RTN) Q3 2016 Results
Thomas A. Kennedy

Demand in Europe focused on deterrence, demand in Middle East is focused on counter terrorism

“In Europe, I think the big one there is deterrence. We’re seeing Eastern Europe very concerned in that area, and so they’re looking for systems that will provide in that kind of a deterrence capability. And so we’re seeing a lot of action on things like the Patriot System and then also our NASAMS system that we have at the nation’s capital and we had a sale in Oman and several other countries out there. So we’re seeing significant pull for those deterrence type systems in Europe. As we move to the Middle East, you’re correct. I would say it’s a little different in Middle East. It’s demand from both the counter insurgency, counter terrorism bucket, and then also the deterrence bucket. And on the counter insurgency, I think you can understand that. That’s some of the demand, OPTEMPO pull here, for precision weapons and some other ground systems that we have.”

Asia Pacific also focused on deterrence

“On the deterrence side, I mean there is a concern, there is neighbor of the GCC that the GCC is concerned about and so you’re getting into deterrence there and therefore you see the demand for systems like Patriot across the whole region, and so that’s the deterrence bucket. And if we go over to the Asia-Pacific region, it’s clear that it’s most of the effort there, demands signals is again coming from this deterrence bucket, looking for solutions like Patriot advanced weapons, radars to be able to see things, ballistic missiles before they hit them and so the Asia-Pacific region is in big demand on the deterrence.”

Department of Defense shifting to dealing with near-peer threats

“The third bucket is really coming directly from the Department of Defense, obviously for all regions in the global area to be able to essentially come up from 20 years of fighting wars of insurgency to now dealing with near-peer threats that potentially have capabilities that are at or potentially in some cases maybe better or perceived to be better than what the U.S. has, and so it’s a big catch up area there. I mentioned, we did mention on the call about a significant increase in classified work. I think that’s really addressing that bucket and to help the Department of Defense regain in some cases its superior capabilities over near-peer threats.”

The demand signals have never been as strong

“I think what’s different here in my entire career is each of those buckets is overflowing, and so the demand signals have never been as strong in each of the three buckets and across those three regions. And you’re seeing that in our book-to-bill, the 1.15 for the third quarter, 1.14 year-to-date and then over the trailing four quarters, 1.16. We wouldn’t be having those book-to-bills if the demand signals isn’t as high as it is and across three regions and across three buckets.”

Lockheed Martin (LMT) Q2 2016 Results Conference Call

Marillyn A. Hewson – Chairman, President & CEO

Increased full-year guidance

“Turning to the summary financials, our team continue to deliver broad-based results across the corporation, the second quarter numbers exceeding all of our internal plans. This strong year-to-date performance enabled us to increase full-year 2016 guidance for sales, segment operating profit, earnings per share, and cash from operations.”

There´s some progress on divesting IS&GS. Expect updated outlook if completed soon.

“Significant progress towards transaction closure continues to be achieved. We commenced our exchange offer on Monday of last week. Also last week, the Competition and Markets Authority in the United Kingdom concluded its review, satisfying another condition to closing…the offer provides Lockheed Martin stockholders the opportunity to exchange their shares of Lockheed Martin for shares of stock in a Lockheed Martin subsidiary, which then become shares of Leidos common stock upon completion of the transaction.”

Note: IS&GS (Information Systems & Global Solutions) is one of five business units in LMT. The transaction alluded to here is the separation of IS&GS business from LMT and the merger of IS&GS with Leidos Holdings, Inc. which is expected to close in the third quarter of 2016.

The F-35 has significantly improved capabilities.

“Overall the [F-35 Joint Strike Fighter] program program continued to achieve good progress across the multiple fronts of winding down development activities, ramping up production rate and sustainment activities and securing customer support and demand….The tremendous technological leap in capabilities that the F-35 provides are being demonstrated on a daily basis to a growing number of domestic and international customers as the aircraft is fielded at additional sites.”

There´s been notable demand from customers n the US and internationally…

“Turning to customer support and demand for the F-35, key milestones this past quarter on the domestic side include revalidation to Congress by the Department of Defense of the critical and unchanged procurement requirement to replace legacy aircraft with 2,443 JSF fighters for the U.S. Air Force, Navy and Marines. Internationally, support remains strong and growing…I was able to see firsthand the growing international interest and support of the F-35 earlier this month, when I had the opportunity to attend both the Royal International Air Tattoo and Farnborough air shows in the United Kingdom.”

…as customers get exposed to its capabilities. 

“Customers and attendees were able to see up close the revolutionary capabilities of both CTOL and STOVL F-35 aircraft at the air shows as they performed their aerial maneuvers. This marked the debut of the F-35 at major international air shows, demonstrating the increasing maturity and progress on the program.”

They’re on track on production and cost reduction strategy.

“On production, we are on track to increase our deliveries to 53 aircraft this year and have delivered approximately 180 aircraft since program inception. In the area of cost reductions, we continue to make significant progress on our previously announced blueprint for affordability, shared commitment between the government and industry.”

Bruce L. Tanner – CFO & Executive Vice President

Improved top line and bottom line growth.

“Sales were higher by $1.3 billion or 11% this year than last year, driven by the inclusion of Sikorsky in the results of MST for about $1.2 billion and nearly $250 million in growth at Aeronautics driven by $400 million higher F-35 volume which more than offset two fewer C-5 deliveries in the quarter compared to last year…Our EPS in the quarter was $3.32, which represents about a 13% increase over the EPS in the second quarter of last year. “

Significant capital return via dividends and share buybacks.

“We generated $1.5 billion in cash from operations and returned $1 billion of cash to our stockholders in the quarter…With just over $1 billion returned to stockholders evenly split between dividends and share repurchases, we returned over 80% of free cash flow in the quarter.”

NB: In Q2 2016, LMT repurchased 2.1 million shares for $501 million (4.9 million shares for $937 million in Q2 2015) paying cash dividends of $501 million ($467 million in Q2 2015)

They might do some more share repurchases coming up.

“30%, 35% of our investor base is sort of income base. So, that’s a pretty significant element of our ownership that is driven, in fact, by the dividend yield. So, that’s an important aspect of capital allocation going forward…there’s still a backlog of options out there that as those do get exercised, we will clearly do share repurchases to offset that dilution. We will do share repurchases to offset dilution from the equity compensation as well.”

F-35 production step ups not expected in the H2 2016.

“We don’t currently have plans for F-35 production step-ups for the rest – or for the second half of the year, and so that’s one of the things that will cause the second half of the year to look a little wider probably than the first half of the year.”

Lockheed Martin at Sanford Bernstein Conference

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.”

Raytheon 4Q13 Earnings Call Notes

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

Bill Swanson stepping down as CEO

“As you all know, I announced my intention to step down as Raytheon’s CEO, and the board appointed Tom Kennedy to be CEO, and Tom is on the call with us today”

Must continue to invest in R&D

“Since you asked me to reflect, one thing that I would say that I am concerned about as we go through this budget process, we seem to be protecting personnel and readiness, which is okay. Those can be bought back very quickly, and I’m going to be working hard to make sure that on the R&D side that we don’t take a lot of cuts in the budget there because, being an engineer, I know how long it takes for R&D to come to fruition. And we’re always a country that has invested in our capability, in war-fighting capability. I know Raytheon, even in the tough times when we had $13 billion in debt, we still invested, and that’s paying off in some of our wins as we look today, and we’ll continue to invest as a company. But I think as a nation, as we look at the — our investments, we’ve got to make sure that R&D is not sacrificed because you can’t buy back that time that you lose.”

It takes time to develop relationships and trust

“I mean, what I would do is remind everybody back to about 8 or 9 years ago when, I guess, we were talking about international. It’s not something you can flip a switch and turn on a light and have it instantaneously happen. So I appreciate people starting organizations and putting things in place, but it takes a while to establish your credibility internationally. And our customers really count on the fact that, I mean, we’ve been in the Mideast 50 years, Japan 50 years, Taiwan 50 years, Korea. I mean, these are the sort of things we’ve done for a long time, and your performance over that period really helps you capture new business. And it’s, to me, it’s all about relationships and trust, and that does not happen overnight.”

Raytheon 3Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“As you know, the U.S. government was shut down for 16 days this month, and we’re operating under a sequestration and yet another CR. To call this a very challenging environment would be an understatement.

Clearly, this is not the way we’d prefer the budget process to operate. No one wants to have to manage their strategic business plans under such circumstances. But by working closely with our customers and focusing on performance, we continue to deliver the solutions our customers need.”

“Financially, the shutdown impact was minimal and has been captured in our updated financial guidance. But personally, the situation was hard on the individuals and the government and the industry who devoted their entire careers to supporting our nation. And while a larger company such as Raytheon have the ability to mitigate the impact to our workforces, our industry supply base does not. These companies are often small and minority owned, don’t have the same resources or flexibility to weather these ongoing budget storms.”

“we’re raising our guidance for sales, EPS and cash flow for the year. This kind of performance doesn’t just happen, rather, it’s a function of a dedicated team working every day to find new ways to improve, to lower our cost and to respond more quickly to our customers’ needs.”

“The growth we are experiencing in our international business partially offsets the decline we’re seeing in our domestic business as a result of sequestration and CRs.”

“we do expect strong bookings for the year, particularly international, and there’s several significant awards that we anticipate in the quarter. As I mentioned, every one of them has got a milestone plan that’s associated with them. They’re reviewed daily or weekly, depending on the business or the program.”

“we’re planning for sequestration to continue. I mean, that’s the environment we’re in. I’d like to think that this budget process is not working. I’ve grown up in an industry where we have appropriations bill. There was a sequence to what we’re doing. You could see it, you could plan on it. Today, we operate under CRs. We have another one that goes to January 15.”

“From what I understand, our customers are planning 2 budgets. Which one gets submitted, I can’t tell you. That’s a product of somebody else making that decision. I just know that American industry really likes to have some finality in what we do. And if you give us a number, we know how to put our strategies and plans in place to make that happen.”

” In my experience, in price, when you buy that way, you don’t get all the capabilities you want, and so they’re going to have to deal with that.”

“clearly, I’m an engineer by training and a technologist, I’d like to think of myself that way. And people, when they look at U.S. systems, they are still state-of-the-art. What people don’t realize is that life cycle costs really run into these decisions. And if you don’t take that into account, you’re going to be really sorry with some stuff you bought. And we know of systems around the world produced by other countries that aren’t working and can’t be [ph] manned. And you have to almost learn that lesson the hard way. So we’ll see what happens here.”

“our customers stay with us because they recognize that we consistently deliver value and equipment to them to be able to handle the threat environment that they’re in.”

“The Army is under the most pressure. They have the largest headcount of any of the services, and the hard choices are strategically, how do you handle the future, do you do it with a smaller service? Do you do it that’s more mobile, more light, and how do you think through that? And when you come from very high numbers to a smaller number, it really makes it hard for them to do that, plus planning, do they have sequester, don’t they have sequester? That’s really tough on them. We’re really trying to work with them in any way we can. But Dave and I would both tell you that, from our standpoint, planning for sequester, we know exactly in our minds what the Army will be doing and that’s in our forecast as we look at things. And we’re not centric around any one service. And from that standpoint, we could weather the storm and why our portfolio is probably in better shape than others.”

“if you look at missile defense, it’s one of the key areas going forward. The other part of missile defense is it never stands still from my standpoint, have been doing this a long time. When you realize you need missile defense, you put it in, then you go through the training to get your troops up to speed. But the threat keeps evolving and changing. ”

“the supply base, and especially minority or small-owned businesses, they are the heartbeat of this country. And for some of them, they’re really key to what we do. So we work with them and try and help them in any way. We send Six Sigma teams in to some of our suppliers to help them be more competitive, that’s good for us and it’s good for them. We’ve sent people in to help on technical issues. And financially, if they’re in trouble, we’ll sit down and work with them to figure out what we can do to be able to get through this. I mean, the shutdown was really hard. I mean, we spent time every day trying to figure out how to make sure that people were getting paid. How did we move, work around? I mean, one of the beauties in our company is with our common systems and processes. We were able to do things, and it identifies areas for us real quick. But it is an area that, as a person that’s been in this industry my whole career, I worry what we’re doing to that, into the business, as a country.”

Raytheon 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“In the U.S., the debate surrounding near and long term resource allocation to national security is ongoing. Congress and the administration continue to work toward a compromise on the fiscal ’14 budget and are not there yet. Current versions of the budget don’t include sequestration, and barring some type of grand bargain, the defense budget ultimately will need to be reconciled with the cap spelled out in the Budget Control Act of 2011, which is about $50 billion lower than the currently proposed levels.

The outcome remains unclear, but as we’ve said all along, we remain focused on executing our strategy and managing the business in order to deliver the best value for our customers and shareholders, whatever the environment.”

“International continues to be a key driver of the business.”

“I can tell you that Raytheon will be making a shift in how we look at our international business because 30% will happen and we’ll be prepared for it. And then as we get to that milestone, we’ll be thinking about 35% because you got to think in increments to go do it.”

[analyst comment] “Northrop mentioned that the impact of higher rates had an adverse impact on their return on assets [in their pension plan] year to date. They were only up 50 bps through the end of June.”

” For us, I would say more than on a year to date basis, but as of just a couple of days ago, we were just under 8% return on assets.” [in the pension plan]