Lockheed Martin Corporation (LMT) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to day 3 of the JPMorgan Industrials Conference. And we're kicking off here bright and early with Lockheed Martin and very grateful to have them with us here to talk about the company. So Jay Malave is here, CFO; Maria Ricciardone, Treasurer and Head of Investor Relations; and Chris Fritz from Investor Relations as well is with us and looking forward to having a conversation about the company. Jay, I think, is going to start us off with a quick safe harbor statement, and then we'll chat, and we'll also involve the audience for some Q&A as well.

Well, thank you, Seth, and top of the morning to you and to everyone here. I'm going to do what I do best and that to read safe harbor statements. All right. Statements made today that are not historical fact are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Actual results may differ materially from those projected in the forward-looking statements. Please see Lockheed Martin's SEC filings, including our 2024 Form 10-K for a description of some of the factors that may cause actual results to differ materially from those in the forward-looking statements.

All right. Very good. Well, I don't know, there wasn't really much to talk about when I was thinking about questions for today. It's been a rather quiet few months. Maybe we start in the news and in the headlines. We'll see what happens with the continuing resolution that's now before the Senate. A couple of questions about that. Let's start off just a full year continuing resolution with some carve-outs for new start programs and flexibility for DoD. How does that affect Lockheed? And how does that fit into the outlook that you guys have given for 2025?

Yes. In general, I'll just talk to continuing resolutions in general and maybe get a little bit more specific about this one. In general, continuing resolutions are really not all that helpful because they delay new starts. It also slows down awards and just continuing the spend of prior year. And so it becomes a little more difficult, the whole process starts to slow down. If you look at this one in particular, though, at least what the House passed was really having a full year continuing resolution. There really was an attempt to make it look like a full year appropriation interestingly because they do give flexibility to invoke new starts as well as some flexibility to reprogram funds as well. So it's a little bit of a different animal from past continuing resolutions, which I think gives us at least a little bit more -- makes us a little bit more upbeat as far as really continuing forward on some of the plans that we had. Look, I think when you look at it right now, the continuing -- could put some pressure on the guide that we provided on the top line, we said in January, 4% to 5% growth. It really though is dependent on what type of flexibility and how they actually manage some of this flexibility they have. And so at the first glance, you could say maybe it puts us pressure really towards the lower end of the guide. But it's really too early to make that declaration. So as things pass, we'll get much better visibility into what the budget is. I think if you're going to be in a continuing resolution, this is probably the continuing resolution you'd want it to be in this type of form because as you mentioned and as I mentioned, at least there's some flexibility.

Okay. Okay. And then within that flexibility, there are a couple of specific issues for Lockheed. So one would be about Lot 18, where we're waiting for the definitization. And I think the -- in -- when the UCA came out in December, I think the idea was that once fiscal '25 appropriations were finalized that UCA could be definitized. And so does this continuing resolution count as appropriations that would allow the DoD to definitize that contract?

Let me take it. So for Lot 18, actually, that was -- my recollection that was 2024 appropriations. So that can get under contract. I see no issues to that. We're still on track to getting that done by the first half of the year. And so we're still working with a few outstanding items with our customer, and we're on a good path to get that done. Your point is well taken, and it's true as it relates to Lot 19. And so that would, again, to the extent that there's some flexibility shown and they're able to provide the Lot 19 continuity that would give us the ups or the upside or just really kind of keep us kind of relatively to where we were expecting for the year. But again, that remains to be seen. We do need -- we would need that flexibility to be applied to Lot 19 contracting.

Right. And so when you talk about sort of what would be required to be in the -- to -- I guess, what affects the outlook for 2025? It's really the flexibility is really most important around that Lot 19 contract?

Yes, there's others. But it -- again, it's really around the largest material impact to us would be new awards that we had assumed in our outlook. And I won't get to specifics into what all those are, but to the extent that those get pushed out, that would put some pressure on the guide, at least towards the lower end. We still feel pretty comfortable in the guide that we have today.

Right. Okay. Okay. Excellent. I guess just while we're talking about F-35, there were some news recently about software upgrade that was coming this summer. So if you could give us an update about what is that bringing to the table? And then when we -- when we think about finishing the full TR-3 capability and having combat-capable aircraft, when that happens?

So on TR-3, where we stand right now is we're making -- continue to make progress on maturing the software. And really what we're doing is really working on bugs for really fixing really system stability. For all intents and purposes, on a technical basis, the Tech Refresh 3 has been delivered. And so now what we're working on really is cleaning up the system. We are simultaneously also working actually on Tech 4 -- Block 4 capability inserting that, which is related to a particular sensor. And so that's being done simultaneously. We're working on that as well. And so we've talked both to the customer and the Joint Program Office as well as Lockheed Martin have indicated that we expect combat capability this year. I would expect that we would continue, though, to provide upgrades going into 2026 as well. And so we think about kind of an iterative spiral type of improvement program is really what we'd be looking at. As I said in the call and on the first quarter call and I've said, I think subsequently to that, is the declaration of combat capability is, one, it's really solely reserved for the customer. And so that's something that the Joint Program Office will work with the Air Force, the Marines and the Navy and go through their process, determine whether the capability they have is sufficient for combat capability. We believe it will be and as do they, but we still have to progress to do that.

Okay. The international side of F-35, something that's been much discussed recently, I think, and maybe this will get into some broader questions about international demand. But to what extent if there was a decision in the U.S. to cut back somewhat on the F-35 buy? To what extent can international customers fill in the gap going forward? And maybe starting off in Lot-19, for example, can Lot-19 be about the same size as Lot-18 with international customers stepping in? And then when we go forward, can it be sort of like a half-and-half type of arrangement?

Yes, I think I would -- yes, because we have sufficient really backlog in international to help fill up any gaps for a few years to the extent that the U.S. decided they want to go down a little bit. Again, we'll have to see how that shakes out in the budgeting process. The international, the backlog there is sufficient really to make that up. And so -- and we continue to get incredible demand. Countries, like, a couple of years ago, we had Canada for 88 aircraft, Germany. There's just Romania, just another 20th customer we just announced. And so the international demand just continues to be pretty strong there. So yes, we think that we can maintain a pretty level production schedule that would probably be a little bit more tilted towards international aircraft.

Okay. And so that 156 and could be half-ish or maybe even a little bit more than that?

It could. Okay.

Okay. Very interesting. On the international side, when we think about growth, how do you think about international versus domestic growth? Let's maybe starting just with this year 2025 and then beyond?

Yes. Thanks for the question, Seth. So in 2024, about 26% of our sales were from international and our backlog, about 30% of it. So you can see that, that kind of wants to lead to that international sales number going up. We expect that we'll get closer to that 30% of sales number by the end of the decade, and there'll be kind of a consistent increase each year as we ramp to that number. So 2025 would be right in line with that.

Right. Okay. Okay. And then as we go forward, I'd imagine the opportunities for international sales. I mean, when you look around the world and we see defense budgets going up in -- I'd say, we kind of think about the 3 regions of Europe, East Asia and Middle East is where your major international customer sets are, budgets are kind of going up everywhere. I'd imagine that's a positive trend as you look at sort of the opportunity set.

Absolutely. The -- in our discussions with customers, it's quite often been we want more sooner. And for the most part, particularly when you talk about Missiles and Fire Control and Ammunitions, where we have our highest international demand, we've just been capacity constrained. And so that's -- it's just a strong area. The backlog is very high there, and we expect that to continue for the foreseeable future. And then it's going to get extended. We talked about F-35, F-16, our backlog, there's over 120 aircraft, which is all international. Also international demand, things like C-130, Black Hawks as well. We're also seeing demand beyond these traditional systems and platforms in space. We've got countries that we're not -- we have not historically been much of a space provider internationally. But whether it's military satellite communications, we're seeing incoming requests for those types of proposals. And so it's really across the portfolio where we're seeing the demand of Lockheed Martin. The other thing is we've talked about in the past is the Command & Control systems, the battle management. We've got the AIR6500 program in Australia and just fully integrating all the capability there to provide, starting with integrated air and missile defense, but then going beyond there for really overall situation awareness for the country. And we've also awarded the contract for Defense of Guam. And so there's a number of those types of Joint All Domain Command Control Systems that are in play as well internationally.

Okay. Okay. And then just when you think about in Europe, maybe it's early. But the idea in Europe that there's going to be a need for them to develop more of their own homegrown defense industrial base. When you think about the demand in Europe over time, is there -- a, I imagine, the answer is yes, but do you still see opportunity for Lockheed Martin. And b, is that weighted particularly in the near term? Or are there -- is there an opportunity to maybe be a partner or coproduce or do things in Europe even as they try to develop their own indigenous capabilities?

Is there a C, all of the above? Yes. And the reason why I say that is this really has really been probably more of a 5-year journey versus just more recently. But what we're finding is these countries are looking for just indigenous capability. That extends to more sophisticated production capability as well as even design capability. So they're looking for really joint development, joint production. And it's something that we're interested in doing with these countries because it provides us what is a longer-term relationship. But it also helps us in terms of supply chain resiliency. So that if we can create some duplicitous or just duplicity in the supply chain, where we've got gaps, it just -- it's a win-win. And so that's the way we're looking at a little bit more strategically, the long-term relationship. Of course, meet whatever requirements they may have, but do it in such a way where it does create a long-term relationship and also what bolsters our supply chain at the same time.

Okay. Excellent. Speaking of supply chain, maybe that's a good segue. You mentioned being capacity constrained in Missiles and Fire Control. Just kind of an update on how things are going, Missiles and Fire Control on the production ramp for the various platforms.

Yes. I mean we'll continue to move forward. We got to our 550 rate on PAC-3, that's this year. We are now moving towards 650 by 2027. We are on our march to 14,000 for guided multiple launch rocket systems, GMLRS. We'll do that over the next few years here as well. HIMARS were pretty much gone. We've gone from like 60 to 70 to 96 a year. We're pretty much there. JASSM, LRASM, we've got a couple of years to go from, say, 700-ish a year to 1,100 a year over the next few years. So that is all pretty much on track. The investments are in place. We've got a brand-new facility for JASSM, LRASM in Troy, Alabama, and so we're ramping up.

Excellent. And then when we think about the potential for margin expansion in Missiles and Fire Control, well, obviously, we'll see the nice step-up this year absent the classified program charge. Once we've reset here in 2025, how do you think about the opportunity beyond as the ramp continues?

And I think -- so think about MFC, it's really around a 14% business, give or take, based on the given year and based on the mix of their sales. You have to keep in mind, even though we recorded a charge on the classified program, it still will be -- those sales will still be recorded at 0 margin going forward. So that will put some pressure on the margins. The other thing, too, even for the legacy programs, as they go through new contracts, old contracts expire, they reset new contracts. Typically, what we'll do is we start those at a lower booking rate and then we build up to the higher booking rates. So it just doesn't that, call it, that margin potential in that contract, you don't see it immediately. And so for that -- for those 2 reasons, you'll see kind of, again, around 14%. Some year, it will be slightly above, other years will be slightly below. But I think that's a good barometer on average, around 14%.

Right. And I think there's a perception around demand for missiles and ammunitions that it's tied to the war in Ukraine. I think at a high level, the Russian invasion of Ukraine kind of triggered a lot of this demand. But if we were to see a ceasefire or a cutoff in U.S. support, my sense has been that, that doesn't really interfere very much with the ramp that you guys are engaged in, but maybe you could speak to that.

Yes. We would agree. The -- what we're finding is that not only the U.S. but other countries have determined that their stockpile levels need to be higher. And so for that reason, we just see a pretty long tail of this demand cycle. And that's really the primary factor. It's really a reevaluation of what the stockpile level should be and then working to achieve those levels. It will take us some time to get there.

Yes. I mean that regardless of what happens in Ukraine in the coming months, I think of that as kind of a multiyear ramp in...

That's right. Yes. Yes.

Okay. I guess maybe segue from MFC into another topic is one of the trends that people talk about kind of big picture trends in defense is the idea of affordable mass. And the company has talked recently or read trade press stories about a low-cost cruise missile. And so maybe you can tell us a little bit about the offering there and how you see that competitive landscape evolving?

Yes. You're referring to our common multi-mission truck, which is a -- it can serve as a cruise missile. It can also serve as just -- it's a vehicle. So you can -- it's modularized so you can put different payloads on it. It could serve cruise missile, as I mentioned. It also can provide an ISR type of capability, depending on what centers you want to put on it. But the point of it is to really be a low-cost, highly producible unit. And this one is made possible by just really our 1LMX investment. This is a born digital program. It's typically for missile programs. Our development cycle goes anywhere between 24 to 36 months. We were able to go from essentially initial design, preliminary design to test within a year on that system. And that was enabled by our model-based enterprise tools that we put in place. And so typically, you don't have a traditional prime being able to move with speed, at least that's a perception. That's a good example of that of where we've been able to do that and position ourselves quite well. And so we'll continue to test that system, but this is with a target cost of about $150,000. So much, much lower cost. Really, it's a sweet spot for, to your point, affordable mass. And so -- and again, it will provide a modular capability, so the customer can do different things with it. And so we think there has a lot of utility there. And we're pretty excited about bringing that forward and getting it certified, qualified.

And so is that something that was done sort of where the company took the initiative to develop this? And now sort of find the customer set?

That's correct. Yes. We did that on our own internal investment provide a, call it, maybe a hole, if you will, in our portfolio -- our product portfolio. Typically, you would associate Lockheed Martin with more exquisite systems. We talked about JASSM, LRASM in those types of systems. But here is, again, pretty low-cost cruise missile.

Right. And also low-cost cruise missile. And then also when we think about there's a perception or I guess, a concern often about build it and they will come. This seems to be an example of that, but also knowing you, Jay, I know this is probably not an extravagant effort to spend a ton of money for something and build it and they will come. It's very -- is it something that's pretty affordable?

I say I'm cheap. Well, maybe a little bit. But yes, no, it's exactly right. It's taking the IRAD and really utilizing the -- we're making a multibillion dollar investment in our 1LMX digital transformation in the company. This is a good outcome of utilizing those tools early on. And so what that does is when you accelerate, schedule and you're able to start testing something and you only do it, essentially half the time that you've done it in the past, you've taken a lot of cost out. So it's not just a schedule, but what comes with the lower schedule or the reduced schedule is just the costs that came out. And so it will be an iterative process. And this is just one example. We're doing a lot of things on internal investment. We've -- where we're actually ramping up our IRAD in the company in things like AI autonomy, crude-on-crude teaming and things like advanced manufacturing as well. So there's a lot of exciting things happening at Lockheed Martin.

Yes. Excellent. And when you do that, is that -- I guess, is there anything you'd note about kind of the structure of doing that? Is it -- people do that kind of within the existing sort of structures? Or are there kind of teams that are off to the side that have maybe a little bit of a different permission structure in terms of what they can do?

Yes, it's a great point, Seth. So we do have that. In this case, it was within the traditional structure and the MFC team is just a great team. They're pretty agile, and they know how to move with speed and start driving to an end result. But we do have certain cases where we refer to it as [ LM evolve ], where we've got essentially separate, whether they're LLCs or C Corps or S Corps, where they go outside the infrastructure of Lockheed Martin and they have own -- we've given them their investment capacity to go move fast and move like a commercial company. So we have a couple. One is essentially an AI type what we provide is the AI platform, the environment for you to put a large language model in there, house your data in there and we sell that service. We've had a couple of successes with the DoD and also with commercial companies in providing that AI environment to players. The other piece we have is we've set up our own microelectronics organization, too, which we refer to as ForwardEdge ASIC. And these are a bunch of really people that worked in commercial industry that are now taking commercial practices and applying them to defense, both inside selling it internally to Lockheed Martin, but also selling it to outside to other players in the defense industrial base. And so those are 2 examples where we've just really moving a lot faster than our ordinary infrastructure would allow.

Okay. Excellent. That's very interesting. I want to take a quick minute to look out to the audience. I know it's early, but anybody have any questions? If not, we'll continue from the stage here. We've got one over here.

Just a quick question on, if you have any conversation about Golden Dome, I know like it's so far ahead. But I just -- if you have any correction in this, like what kind of capabilities you have and also how that evolves with their competition with the small tech companies?

Yes. The Golden Dome is just -- it's a significant opportunity. When you think about the capabilities that Lockheed Martin has, we have the capability to manage the systems architecture. We have the capability to manage the systems integration. And then we also have the capability to deliver component pieces of an integrated air and missile defense. And I'll give you some examples, things like PAC-3, interceptors, THAAD interceptors, we have that capability. Ground radar capability, we have a pretty robust ground radar portfolio in the company, space assets to be able to detect missile warning and missile tracking. And so -- and also, as I mentioned before, the whole integrated systems. So what we're using for Defense of Guam is what we refer to as Aegis Ashore. And that's a system to be able to really manage and provide really control over the entire fire control loop. So everything that you would expect or require in an integrated air and missile defense program, even one at that large scale we provide. But we view it as more of a -- really a national team because of the scale of it, that there would be -- there would probably be a lot of players in this, including Lockheed Martin providing. Our view is that all the players should be participating is providing the best of the best capability for this system. The customer is going through, and they'll have to ultimately determine exactly who owns the program and all those type of things, but we've responded to request information, and we're pretty excited about this opportunity. We think it's the right thing to do. And we think that Lockheed Martin has a significant role to play in it.

All right. And I mean, is it safe to say that one of the key things that's going to have to be determined is just where within DoD, the authority is going to sit for this and sketching out exactly what the requirements are going to be to move forward?

Yes, I think that it'll kind of go through exactly where they want to house it and manage it. And again, to what extent if they want to manage integration and what role industry will play. And so that's all to be determined. And so again, more to come there.

Yes. Is that something where you think when fiscal '26 budget proposal comes out, that's something that will be kind of a centerpiece of the proposal?

Possibly even some of this kind of reprogram capability in 2025, the full year continuing resolution may allow for some initial work on that as well. I think the administration wants to move pretty quickly and be able to field capability during this term. And so I would expect there probably will be some funds allocated to that for the '25 budget as well.

Okay. Yes. I guess that gets to the question of a lot of confusion in recent weeks around the 8% that the Secretary talked about, and maybe you can correct me if I'm wrong, my understanding is that they wanted the services and organizations within DoD to identify 8% of their budget that they could reallocate. It wasn't necessarily a cut. I assume at the top of the list of what would be a beneficiary of a reallocation would be Golden Dome for America. When you think about on the negative side of the ledger, the things that are vulnerable, are there particular areas within your portfolio that you'd be concerned about?

Everything that we do is national security critical. So it's really hard to speculate on a particular program. Would they say, well, maybe we can live with a particularly program with a lower level of spend on that for a few years and then ramp it back up. That's always possible. But it's really hard to speculate on any specific programs there because we're driving hardware under contract, and we're moving hard for a lot of these programs. And you have to be -- the other thing that you have to keep in mind is its production -- you want production stability when you're in a production program. You start whipsawing production becomes very difficult to ramp it back up because what happens in the supply chain,is that, that capacity then gets diverted elsewhere. And then when you want to come back and go back to whatever volumes you're operating at, that capacity has been consumed by something else. And so these are all dialogues and decisions ultimately the customer make because they live with a finite budget. But we really don't have any insight in terms of what they would be looking at. So I don't really want to speculate on that. But I agree with you that Golden Dome, some of these funds will be carved out for Golden Dome. Sure.

Okay. Excellent. We talked a little bit before about space. It was a very interesting comment about the international side. When you think about space going forward, we all see a lot of new companies emerging who are doing things in space. It's an area that's seeing a lot of investment now. When you think about Lockheed, what are the core capabilities and the things that you want to do in space over time and the things that make best use of you guys have some scale, you have a long legacy in this domain. How do you make best use of that in a market that's becoming more -- where more players are emerging?

Yes. So Seth, to your point, what Lockheed Martin has, and I think a differentiator for us or a discriminator is just our legacy of experience and mission knowledge. Now in those cases, in many cases, it's been in the provision of exquisite systems, things like SBIRS, next-gen GEO, those are types of system. So all these types of systems are things that we've provided in the past. But we say over the last 5 to 10 years, you've seen a shift from exquisite more towards these lower-cost proliferated constellations that will be recapitalized every, say, 5 years or so versus an exquisite system that's expected to have a useful life anywhere between 10 and 15 years. And so we've pivoted over that period of time over that 5 to 10 years. We're participating in the SDA transport layers, which are proliferated constellations in LEO. We are also participating in SDA tracking layer, which is missile warning there. And so we've been able to pivot with the change in space architecture. There's a number of things that are also happening in classified areas that are kind of a similar, where you're seeing proliferated constellations versus the large exquisites. When you look at our product portfolio and who we are, we are a systems integrator, whether it's exquisite or the proliferated constellation. We also manufacture the satellite vehicles. And so whether it's a large exquisite, say, the LM2100, we're in development in -- on our path to qualifying our midsize, which is our LM400 system satellite vehicle. And then as you know, we purchased Terran Orbital last year, which provides us the low end, which is the smaller sats, which is are all on our SDA programs. And so I think that our -- the Lockheed Martin Space team has done a really nice job moving with the industry. And so I think that their level of expertise, their mission knowledge and experience is no less relevant now than it was 5 years ago. If anything, it's even more relevant really to support all the new entrants and really provide the capability to the customer and the speed that they need. As I mentioned, you obviously can't get into a lot of classified, but there's things that are happening in classified areas where things are moving from domain to domain and spaces absorbing more emission requirements. And in that case, we're kind of front and center on those capabilities.

Right. And certainly relevant as well for Golden Dome.

Absolutely, yes. Yes.

Okay. In the launch area, when do you think ULA starts to grow earnings again? And what -- how do you think about ULA longer term? Would you ever want to own all of it?

Well, let me just talk about ULA first. This year, what we're laser focused on is getting the Vulcan certified. And we believe that we're getting close to that. We've got in backlog over 75 launches. So we've got pretty good line of sight to solid growth. What I would tell you in terms of the profit growth, probably starting in 2026. We're still dealing with some cost headwinds here on the Vulcan certification in '25. So that's going to put some pressure. But what I will say is that our space segment is pretty well positioned for the year, even with the headwinds that they're seeing at ULA. And so we feel confident in the guide that they have that's absorbing some of the pressure from ULA. I think longer term, we still think that they will be a competitive business. They will have their share of national security space launches. And as you know, they also were selected on the Amazon Kuiper constellation. We see that there's opportunity for future launches there too, beyond what we're in a contract for. And so there's a lot of activity in space. Launch is necessary, and we expect ULA to be a significant player in the future. As far as we've had dialogue with Boeing over a number of years in terms of the ownership structure of 50-50, I think we both acknowledge it's probably not the most ideal because our interests aren't always aligned 100% of the time based on kind of investment decisions that ULA may need to make. But for the moment, for the time being, I think we're pretty satisfied. We've got a very good relationship with Boeing as it relates to ULA. We work very well together. We're pretty aligned. And so -- you never say never on things, but it's not a burning platform at the moment.

Right. Okay. Very good. Wanted to ask about just when we think about bookings and we think about what's going on in Washington, not necessarily anything specifically related to Lockheed Martin, but just in terms of the level of award activity that we see out there, a lot of folks who work for the government are probably have some dislocation at their jobs. Are you seeing any impact on award activity in the quarter?

So we have just typically for the year, usually, the first half is lighter in award activity and particularly the first quarter. And this year is not really any different. So we expect a later first half book-to-bill is likely to be less than 1. And then we have no meaningful orders that we expected in Q1. I wouldn't necessarily attribute that to any dislocation. I think it's much more of a just the cadence and the typical way that we see things playing out as the year goes on.

Cool. Very good. Let's maybe do a quick look out into the audience if we have a final one. If not, maybe just -- we've actually touched on a lot of, I think, really cool high-level stuff here. Just if I could slip in 1 rather crude cash flow question at the end. When we think about the targets that you guys had back in October, and I think at that time, the 2024 guide was for about $6.2 billion, and it was to grow free cash flow dollars at -- I think it was a low single-digit CAGR off of that $6.2 billion. Is that still the right way to think about it?

Yes. Yes. I think that's definitely the target is to grow. And again, as you point out, on the base of the $6.2 billion, which is adjusted for some of the actions that happened in the last second or third later in the year. I will say there is still some work to do. So we have another pension requirement, cash requirement in 2026 of about $1 billion. And at this point, we estimate that there will be a tail of additional contributions in the years ahead as well. So there's opportunities. To do that, we have a very strong balance sheet. We could always use that. We're working on working capital and getting more days out of our cash conversion cycle. So there's things that are still being solutions, so still some work to do, but we have that as our target as low single-digit growth off of that $6.2 billion. And I'll also just point out, we do have a track record of continuing to return cash to shareholders, $3-plus billion of dividends, another $3 billion of share repurchases this year. So that we feel very confident in and expect to continue that as well.

Just maybe a little plug, keep in mind, this year's guide is high single-digit absolute free cash flow generation so growth. So we're definitely on the right path.

Okay. Excellent. Very good. Well, we're over time. So let's leave it here. But Jay, Maria, Chris, thanks very much for being here. We really appreciate it.

Thank you, Seth, and thank you for having Lockheed Martin here.