Slide 1: Portfolio Shaping Actions & 2nd Quarter 2015 Financial Results
Lockheed Martin Corporation Portfolio Shaping Actions & 2 nd Quarter 2015 Financial Results July 20 , 2015 11:00 am EDT Webcast login at www.lockheedmartin.com/investor Webcast replay & podcast available by 2:30 p.m. EDT July 20 , 2015 at www.lockheedmartin.com/investor Audio replay available from 2
Slide 2: Acquisition of Sikorsky Aircraft & Strategic Review
Lockheed Martin Corporation Acquisition of Sikorsky Aircraft & Strategic Review
Slide 3: Forward Looking Statements
3 Forward Looking Statements This presentation contains statements which, to the extent they are not recitations of historical fact, constitute forward - looki ng statements within the meaning of the federal securities laws, and are based on Lockheed Martin’s current expectations and assumptions, i
Slide 4: Reshaping the Portfolio
4 Reshaping the Portfolio • Signed Definitive Agreement to Acquire Sikorsky Aircraft – Access to Military & Commercial Rotary - Wing Segment Valued at More Than $30 Billion Annually – Complementary Defense Investment With Low Execution Risk – Attractively Priced National Asset Using Section 338(h)(1
Slide 5: Sikorsky Overview
5 Sikorsky Overview • World Leader in the Design, Manufacture, and Service of Military and Commercial Helicopters • ~15,000 Highly Skilled Employees • Headquartered in Stratford , CT • Operates in 20 Countries, With Products Used in Over 40 Countries 75% 25% Commercial Military Revenue Composition 2
Slide 6: Acquisition Rationale
6 Acquisition Rationale • Sikorsky Has Familiar Customers and Is Well Positioned With an Established Brand and Robust Backlog • Sikorsky and Our Mission Systems and Training Business Have a 40 Year History of Partnering on Programs • Strong Aftermarket Business Provides a Long - Term Source of Earni
Slide 7: Future Growth Prospects
7 Future Growth Prospects • Sikorsky Military Business Secures and Extends Our Core Defense Business – Multiple USG Development Helicopter Programs are Funded and Expected to Transition Into Production in 2018 (CH - 53K, Presidential, Combat Rescue) • Enables Further Expansion of Our International O
Slide 8: Transaction Valuation
8 Transaction Valuation No Change to Our Previously Outlined Plan to Return Cash to Stockholders Through Dividends and Stock Repurchases Between 2015 and 2017 • Gross Purchase Price $9.0B • Adjusted Price After 338(h)(10) Election 7.1B • Transaction to Be Funded With a Combination of New Debt and Av
Slide 9: Synergy Overview
9 Synergy Overview • ~$2 Billion Tax Synergy From Section 338(h)(10) Tax Election • Run - Rate Expected Cost Synergies of ~$150 Million Annually • Strong Lockheed Martin Relationships With International Governments…Ability to Match Security Needs With Full Spectrum of Our Combined Security Offerings
Slide 10: Strategic Evaluation of IT & Services
10 Strategic Evaluation of IT & Services Current Structure Potential Future State Strategic Review Retain IS&GS MST MFC Space Air Traffic Management Yes Technical Services Yes Government/Enterprise IT Yes Commercial Cyber Yes Government Healthcare IT Yes Mission IT & Services Energy Solutions Space
Slide 11: Summary of Announcements
11 Summary of Announcements • A Combination of Two Powerful Portfolio Reshaping Activities Creating Long - Term Stockholder Value • Significant Synergies With Low Execution Risk • Corporation Increasingly Positioned for Long - Term Growth Value Creation for Investors and Customers
Slide 12: 2nd Quarter 2015 Financial Results Conference Call
Lockheed Martin Corporation 2 nd Quarter 2015 Financial Results Conference Call July 20, 2015 11:00 am EDT
Slide 13: Forward Looking Statements
13 Forward Looking Statements Our presentation contains “forward - looking statements” or projections based on Lockheed Martin’s current expectations and assump tions. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may dif fer mat
Slide 14: 2nd Quarter 2015 Overview
14 2 nd Quarter 2015 Overview • Achieved Sales of $11.6 Billion • Achieved Segment Operating Margin* of 12.0% and Earnings Per Share of $2.94 • Generated $1.3 B illion in Cash From Operations • Returned $1.4 Billion of Cash to Stockholders, Including Repurchasing 4.9M Shares for $937 Million • Incre
Slide 15: Sales Summary
15 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 2Q 2014 2Q 2015 $11.6B $11.3B Sales Summary 2Q Sales Exceeded 2014… Tracking to Full Year Outlook ($B) +3%
Slide 16: Segment Operating Margins
16 4% 6% 8% 10% 12% 2Q 2014 2Q 2015 12.0% 12.4% Segment Margin (%) *See Chart 25 for Definitions of Non - GAAP Measures Segment Operating Margins* 2Q Margin Exceeded Expectations… Increasing Full Year Outlook
Slide 17: Earnings Per Share
17 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 2Q 2014 2Q 2015 ($ EPS) $2.76 $2.94 Solid EPS Growth Earnings Per Share +7%
Slide 18: Share Repurchase Activity
18 $0.0 $0.5 $1.0 $1.5 2Q YTD 2014 2Q YTD 2015 June YTD $1.5B ($B) $ 1.2B $0.0 $0.3 $0.6 $0.9 $1.2 2Q 2014 2Q 2015 2Q Comparison $937M ($B) $124M Share Repurchases Ahead of 2014 Quarter and YTD Pace…On Track for ≥ $2.0B Target Share Repurchase Activity
Slide 19: Strong Cash Returns to Stockholders
19 0% 30% 60% 90% 120% 150% $0 $1,000 $2,000 $3,000 2Q 2015 YTD 2015 ($M) *See Chart 25 for Definitions of Non - GAAP Measures Share Repurchases $937M Shares $467M Dividends 131% Total Cash Returned (% FCF*) YTD Cash From Ops $ 2,220 M Less YTD CapEx (309) YTD Free Cash Flow* $ 1,911 M $1,404M Cash
Slide 20: 2015 Outlook Update
20 2015 Outlook Update ($M, Except EPS) Prior (April) Current (July) *See Chart 25 for Definitions of Non - GAAP Measures Orders $ 43,500 - 45,000 No Change Sales $43,500 - 45,000 No Change Segment Operating Profit* $5,150 - 5,300 $5,225 - 5,375 Unallocated Corp Inc / (Exp) FAS/CAS Pension Adjustmen
Slide 21: 2015 Sales Outlook
21 2015 Sales Outlook ($M) Sales (Prior) $7,000 - 7,300 Aeronautics $14,700 - 15,000 Space $7,500 - 7,800 MFC $7,300 - 7,600 IS&GS $43,500 - 45,000M $7,000 - 7,300 MST Sales (Current) $7,000 - 7,300 Aeronautics $14,700 - 15,000 Space $7,500 - 7,800 MFC $7,300 - 7,600 IS&GS $43,500 - 45,000M $7,000 -
Slide 22: 2015 Segment Operating Profit Outlook
22 2015 Segment Operating Profit* Outlook Segment Operating Profit Outlook Increased by $75M Segment Op Profit (Current) $5,150 - 5,300M Segment Op Profit (Prior) $5,225 - 5,375M *See Chart 25 for Definitions of Non - GAAP Measures $ 1,230 - 1,260 Aeronautics $ 1,625 - 1,655 Space $900 - 930 MFC $59
Slide 23: Summary
23 Summary Strong Quarter Tactically and Strategically • Strong Quarter of Operational and Financial Performance • Cash Deployment Actions Continuing to Generate Returns to Stockholders • Results Reflect Program Execution, Proactive Measures, and Broad Business Portfolio • Portfolio Actions…Sikorsky
Slide 24: Financial Appendix
24 Financial Appendix
Slide 25: Non-GAAP Financial Measures Disclosure
25 Non - GAAP Financial Measures Disclosure This presentation, and today’s conference call remarks, contain non - Generally Accepted Accounting Principles (GAAP) financial measures (as defined by SEC Regulation G). While we believe that these non - GAAP financial measures may be useful in evaluating
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