Lockheed Martin Corporation Q3 2009 Earnings Call Transcript

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2009-10-20 13:08:09.0

Tags: Lockheed Martin Corp., Call Transcript, Aircraft, EBIT, Earnings, Sales Strategy, Aerospace & Defense, Sales Force Management, Sales, Manufacturing, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions). We will take our first question from George Shapiro with Access 342.

George Shapiro - Access 342

Bruce, I would like you to go through in the projection for aeronautics margin? I mean you got it down in the low 11s and this year is probably going to be 12, 9, give or take a little bit. It almost seems to me that to get the margin that low, you must have been making 20% margins or so on the F-22 program, which was a lot higher than I thought or let me turn it over to you to get further explanation.

Bruce Tanner

Let me say by introduction, there is going to be a lot of moving pieces here. So, I am going to walk you through this kind of slowly if I could. Starting with sales, the sales, we are expected to be pretty strong next year, 7 to 9% in the range that we provided to you in the guidance. Think of that as greater than 25% growth year-over-year on the F-35 program, in excess of $1.2 billion growth from 2009 to 2010.

The F-22, because of the drawdown that the production program in 2012 are already starting to see some early indications of that, and so F-22 volume is probably down nearly $400 million from 2009 to 2010.

F16, aircraft quantities are going from 31 in 2009 to 20 in 2010. Think of that being in excess of $500 million or so of sales, and think of those sales coming from aircraft that are the highest margin aircraft in our portfolio within the Aeronautics business area.

Then lastly, the C-130, we're actually growing the aircraft there, obviously, as Bob mentioned in his remarks from 16 to 26. Think of that as adding about $600 million on the C-130 program.

So if you take a look at the EBIT side of that, just again to tie this together, EBIT does show us going down, think of EBIT, I think at the midpoint, it is like in the 11.2% range, from a ROSS perspective, probably down over 1.5, 1.6 percentage points compared to what we expect to run in 2009.

The contributors there again, think of the F-35, although the absolute EBIT dollars on the F-35 are up about 60%. Think of that as driven by the sales growth but also planned improvements on the margins, on that program. Think of it being a little less than 5 in the 2009 timeframe to a little more than 6% on average for the year 2010.

 

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