Lockheed Martin Morgan Stanley's 14th Annual Laguna Conference

Sure. Well, I'm glad you started off, Kristine, this morning with technology. Good morning to all of you here. Thanks for coming today. I'm, first of all, going to be, as an ex-Air Force pilot, very proud to say that U.S. government and us, speaking of technology, just announced this morning the long-term multi-year agreement for the Joint Advanced Tactical Missile, which is an air-to-air missile that's more advanced, next generation, if you will change the deterrent posture that we can provide. The JATM, as it's called, AIM-260, is going to be produced, but it's not even in full rate production yet, and the U.S. government's already agreed with us to a long-term, multi-year contract to deliver it. That's how good this technology is. Our role in this entire changing ecosystem, I believe, is to take the Lockheed Martin systems integration heritage.

We make the most advanced systems like the JATM I just described, F-35, Trident Missile, Patriot PAC-3 MSE. These are highly complex, very high capability devices and products and platforms. We've got a history of almost 100 years of being able to do that. We have the DNA, we have the muscle, and with the way that warfare is evolving, we're taking that muscle, we've been working on this for about three or four years, and going from the systems integration lead to the mission integration lead. What's the mission? Well, let's talk about products first, and then we can evolve to a mission. The product is air-to-air combat, air superiority. That's one of the 12 missions that we design to. With JATM, for example, what we've done is we've integrated the most advanced next generation air-to-air missile with the most advanced fighter aircraft, F-35 and F-22.

We did that mission integration because now our app, if you will, or the Air Force's app or the Marines and Navy, their app is not like Google Maps to just have navigation show you where to go next and how to turn your car. Their apps are shooting down other airplanes and protecting yourself. We can do the systems integration, JATM into F-35, for example, seamlessly. That's in our muscle memory. What we can do as a mission systems integrator is match those two complex systems together and then match them with digital technologies that allow the mission, through a mission technology roadmap, to keep advancing capability. If there's a new missile, that's great, it's a step function up. If there's a new airplane, it's great, it's a step function up. But every 3 to 6 months, we're also using digital technologies to create more capability.

The real centerpiece for Lockheed Martin is to be able to do systems integration into a mission integration package with new technologies and new entrant products and those from Northrop Grumman or Boeing Defense. That's our sweet spot, is full mission integration, and we've been practicing that for, call it 4 years, with these mission technology roadmaps. Our goal is to work with our customers, the users, to create decisive military advantage at a theater level scale. That is really the core mission of Lockheed Martin, and that's what we do. The key thing on the high-end platforms and systems and the low-cost counter-UAS systems, for example, is that you've got to have, for certain mission subsets, the high-end system.

Just to talk about air and missile defense for a moment, the PAC-3 MSE and the THAAD, expensive, high-end, super capable missiles, they can hit long-range ballistic missiles. They can also target hypersonic missiles and everything below that. The trade-off of using a PAC-3 missile for a Shahed drone is not a good one economically, and so we know that there's other ways we should be able to deal with drones. The drone solutions we've come up with, the newer technologies, using some startups as suppliers, actually, some of our venture investments as suppliers are solutions to the mission roadmap. We've come up with 2 or 3 systems now that we can integrate into that air defense missile defense. That will create deterrence, which is really what our product is. Our product is deterrence. It's not a PAC-3 missile. It's not simply an F-35.

It's creating deterrence against great power conflict, which is a very valuable service. That's our role, is to be the mission integrator using our systems integration capabilities and the high-end products that we actually do make.

I think the starting place for the Ukraine stalemate, essentially trench warfare, is that neither side has been able to create air superiority in a level that we just described. If either side, Russia or Ukraine, had complete command of the air, this drone trench warfare may not have developed. It wouldn't have had time to develop, and we would be in a different situation. But you do have to have both. You have to have the high-end control of the air, and also you have to be able to counter these new autonomous, relatively low-cost attack weapons, is what they are. That may not necessarily be what we will emphasize. What we will emphasize is the much more complex mission of counter-UAS. Almost anyone can build with Chinese parts generally, and that's how the Russians and Ukrainians are doing it.

With Chinese parts, you can build a drone that can drop a hand grenade in a trench. Almost anyone could do that in their garage. But when it comes to seeking out that drone, identifying it, and destroying it in mass, hundreds or thousands, that is a much tougher mission set. Again, the offensive drone warfare is an easier technical problem, frankly, than counter-UAS. What we've been doing, building this muscle of mission technology roadmap, assessing evolving kind of threats or new weapons that are put into play, like in Ukraine and actually also in Iran now, we're able to quickly motivate our engineers to design to the mission, not design to an RFP only. That's where the two systems, the counter-UAS systems that we're scaling now came from. They came not from a lengthy RFP from the U.S. government.

They came from us with our experts, many of them ex-military and ex-intelligence community veterans, coming in, building those technology roadmaps and saying, "We have to be able to do this." There's no RFP from the government. They haven't really thought through the technical solutions yet, or maybe they're going a different direction. What we do with our mission technology roadmap say, "What do we have right now?" Like on the shelf and deployed, by the way, because if it's deployed, it can be used quickly. Some of the things that we have on the shelf are, and actually the Army does, Hellfire missiles. We build tens of thousands of those a year. There are more tens of thousands of those in the stockpiles across all our allies in the United States. We kind of unleashed our engineers with these mission technology roadmaps.

These are day job, which is respond to RFPs, then design to those. But a lot of their time now is built on figuring out what the next thing is going to be, maybe even before the U.S. government puts the request for information out about it, and offer them solutions. That's the new Lockheed Martin. We're not just waiting for RFPs. We are, but that's not all we do. Right now, we're looking at our own mission technology roadmaps and saying, "What's the next thing that's going to be needed, and how can we scale it to a theater level?" When I say theater, I don't mean like a movie theater. I'm talking about the Pacific Ocean, okay?

Big theater. Europe. Yes. That's right.