Lockheed Martin executives touted a strong fourth quarter during a year-end earnings call Tuesday, claiming each of the company's business areas met or exceeded expectations set for 2022.
“Lockheed Martin followed-up a solid third quarter with a strong finish to 2022, highlighted by a 7% year-over-year sales growth in the fourth quarter and effectively managed a turbulent year impacted by COVID and supply chain disruptions as well as inflation levels not seen in decades,” Chief Financial Officer Jay Malave said on the call.
As one of its flagship programs, CEO James Taiclet touted several recent announcements for its F-35 Lightning II fighter jets.
Lockheed and the Joint Program Office finalized a production contract of $30 billion for up to 398 F-35s in lots 15 and 16 and an option for lot 17. The Defense Department also authorized Lockheed to procure long-lead items for lot 18 F-35s for U.S. services as well as allies, Taiclet said.
Germany and Canada in recent months both joined the F-35 program, Taiclet said, and Lockheed will produce the aircraft for Belgium, Finland and Poland.
Lockheed is anticipating bringing Technology Refresh 3 into its F-35 production line later this year, Taiclet said during the call. Manufactured by L3Harris, TR-3 had been planned for inclusion in lot 15 aircraft that begin production this summer, but prolonged testing for the new hardware could drag on through the year.
In a written statement to Inside Defense, the company said, “We continue to make progress toward delivering TR-3 on lot 15 aircraft, as evidenced by the first flight announced this month, and look forward to delivering it later this year.”
Earlier Tuesday morning, Lockheed Martin also ran the first test of its Block 70 F-16 fighter jet, Taiclet said. It’s the first of 16 that will be delivered to Bahrain. Five other countries have also announced plans to acquire Block 70 and 72 F-16s from Lockheed, including Jordan and Bulgaria, according to a company news release.
“We’re out actively marketing this jet to those countries that may not be authorized yet or may not have the infrastructure yet for the F-35 at this moment but may in the future,” Taiclet said.
Lockheed reported “several” milestones for classified business efforts with a growth of 5% year-over-year, according to Taiclet.
“We continue to expect growth in classified that will outpace the rest of the portfolio over the next several years,” he said.
Lockheed has a pole position, or lead, not just in hypersonic missile efforts with its work on the Air-launched Rapid Response Weapon but also with efforts to counter hypersonic missiles, Taiclet said, noting that much of the work is classified.
“We have a lot of the elements that will go into the eventual counter-hypersonic solutions,” he said. “We are working on many of them right now, integrating what we have and developing what we need.”
Executives signaled that Lockheed will face some headwinds in the coming year, but Malave said many of those challenges are “unique” to 2023 and will lift in the next year.
“We’re going to see gradual improvement in supply chain as well as in our internal operations in ‘23 with stronger growth in 2024,” Malave said.
Lockheed’s Sikorsky and Rotary and Mission Systems, Malave said, are in transition right now but will double deliveries in 2024. Malave also said there is growth potential in Lockheed’s Missiles and Fire Control business.
Bipartisan support in Congress for modernizing joint and allied forces as well as for arming allies to deter further conflict produced funds in the FY-23 budget that have gone or will go to Lockheed Martin. Taiclet said he doesn’t anticipate funding will go down as the FY-24 budget is crafted as the war in Ukraine continues.
“We don’t see the circumstances, the fundamentals changing,” Taiclet said. “Therefore, we also believe that the continued robustness of the defense budget is going to be a reality as well.”
When asked by an analyst about the push from some lawmakers to reduce spending, Taiclet said he “can’t predict the political dynamic” with Congress and the Biden administration. Instead, Lockheed will keep its “head down, stay on our plan and do our job and hope that the right thing will occur at the other end of the 2024 budget process.”