Lockheed Missiles and Fire Control took a $100 million loss on a classified program in the first quarter of 2024, company officials said April 23. That program will incur another $225 million loss across the rest of the year and over $1 billion in losses cumulatively, they said, but they’re convinced the mysterious program will be a “franchise” for all the military services and be highly profitable starting in 2028.
“We did have the $100 million dollar loss provision” in MFC for the classified program in the first quarter, Lockheed Chief Financial Officer Jay Malave said on the company’s April 23 first quarter results call. “There’s in the range of another $225 million in the back half of the year…Depending on other factors as the year goes on.” Those factors include a “technical milestone achievement.”
He said that Lockheed is prepared for losses in “excess of a billion dollars” but added that the timing of that “is still to be determined.”
Jim Taiclet, Lockheed Martin’s president and chief executive officer, said the classified program “will have very, very, long legs. There’s going to be many, many years, we believe, of orders to follow. … But I think if you look [at] the curve for the life cycle, it’s going to be significantly positive. And so we want to get there as efficiently as we can.
“This is a long-run franchise program that I think the U.S. government is going to support for a very long time,” Taiclet asserted.
Taiclet said “it’d be about 2028” when the program “flips positive” for cashflow.
The program in question isn’t likely to be the same one referenced in mid-2021, when Taiclet also announced a $225 million charge against a classified program. That project was characterized as a Lockheed Aeronautics project, while the April 23 announcement was associated with the Missiles and Fire Control sector. In the 2021 statement, though, Taiclet used similar phrasing, saying that project “will be a good program for Lockheed Martin” in the long run.
Taiclet also reiterated that Lockheed is taking a harder look at how it bids programs, is avoiding being too aggressive, and thinks government needs to acknowledge that companies aren’t going to do loss-leaders anymore.
The “highest risk” in contracting is “fixed price production on something that’s not been designed yet,” he said.