#1Lockheed Martin Corporation 3rd Quarter 2021 Earnings Results Conference Call Tuesday, October 26, 2021 11:00 a.m. ET Webcast login at: www.lockheedmartin.com/investor Webcast replay & podcast available by 2:00 p.m. ET October 26, 2021 at: www.lockheedmartin.com/investor Audio replay available from 2:00 p.m. ET October 26, 2021 through midnight October 27, 2021 Access the audio replay at: U.S. and Canada: (866) 207-1041; International (402) 970-0847 Replay confirmation code: 1229017#2Forward-Looking Statements This presentation contains statements that, to the extent they are not recitations of historical fact, constitute forward-looking statements within the meaning of the federal securities laws, and are based on Lockheed Martin's current expectations and assumptions. The words “believe,” “estimate,” “anticipate,” “project,” “intend," "expect," "plan," "outlook," "scheduled," "forecast" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties. Actual results may differ materially due to factors such as: the impact of COVID-19 or future epidemics on the company's business, including potential supply chain disruptions, facility closures, work stoppages, program delays, payment policies and regulations, the company's ability to recover its costs under contracts and impacts of implementation of vaccine mandates on our workforce and business; budget uncertainty, the risk of future budget cuts, the debt ceiling and the potential for government shutdowns and changing funding and acquisition priorities; the company's reliance on contracts with the U.S. Government, which are dependent on U.S. Government funding and can be terminated for convenience, and the company's ability to negotiate favorable contract terms; risks related to the development, production, sustainment, performance, schedule, cost and requirements of complex and technologically advanced programs including the company's largest, the F-35 program; planned production rates and orders for significant programs; compliance with stringent performance and reliability standards; materials availability; performance and financial viability of key suppliers, teammates, joint ventures and partners, subcontractors and customers; economic, industry, business and political conditions including their effects on governmental policy and government actions that disrupt the company's supply chain or prevent the sale or delivery of its products (such as delays in approvals for exports requiring Congressional notification); trade policies or sanctions (including potential Chinese sanctions on the company or its suppliers, teammates or partners; U.S. Government sanctions on Turkey and its removal from the F-35 program and potential U.S. Government actions to restrict sales to the Kingdom of Saudi Arabia and the United Arab Emirates); the company's success expanding into and doing business in adjacent markets and internationally and the differing risks posed by international sales; changes in foreign national priorities and foreign government budgets and planned orders; the competitive environment for the company's products and services, including increased pricing pressures, aggressive pricing in the absence of cost realism evaluation criteria, competition from emerging competitors including startups and non-traditional defense contractors, and bid protests; the timing and customer acceptance of product deliveries and performance milestones; the company's ability to develop new technologies and products, including emerging digital and network technologies and capabilities; the company's ability to attract and retain a highly skilled workforce; the impact of work stoppages or other labor disruptions; cyber or other security threats or other disruptions faced by the company or its suppliers; the company's ability to implement and continue, and the timing and impact of, capitalization changes such as share repurchases and dividend payments; the company's ability to recover costs under U.S. Government contracts, our mix of fixed-price and cost-reimbursable contracts and the impacts of cost overruns and significant increases in inflation; the accuracy of the company's estimates and projections; the impact of pension risk transfers, including potential noncash settlement charges; timing and estimates regarding pension funding and movements in interest rates and other changes that may affect pension plan assumptions, stockholders' equity, the level of the FAS/CAS adjustment; actual returns on pension plan assets and the impact of pension related legislation; the successful operation of joint ventures that the company does not control; realizing the anticipated benefits of acquisitions or divestitures, investments, joint ventures, teaming arrangements or internal reorganizations, and market volatility in the fair value of investments in the company's Lockheed Martin Ventures Fund that are marked to market; risks related to the company's proposed acquisition of Aerojet Rocketdyne, including the failure to obtain, delays in obtaining or adverse conditions contained in any required regulatory approvals and the company's ability to successfully and timely integrate the business and realize synergies and other expected benefits of the transaction; the company's efforts to increase the efficiency of its operations and improve the affordability of its products and services; the risk of an impairment of the company's assets, including the potential impairment of goodwill recorded as a result of the acquisition of the Sikorsky business; the availability and adequacy of the company's insurance and indemnities; the company's ability to benefit fully from or adequately protect its intellectual property rights; procurement and other regulations and policies affecting the company's industry, export of its products, cost allowability or recovery, preferred contract type, and performance and progress payments policy, including a reversal or modification to the DoD's increase to the progress payment rate in response to COVID-19; changes in accounting, U.S. or foreign tax, export or other laws, regulations, and policies and their interpretation or application; and the outcome of legal proceedings, bid protests, environmental remediation efforts, audits, government investigations or government allegations that the company has failed to comply with law, other contingencies and U.S. Government identification of deficiencies in its business systems. These are only some of the factors that may affect the forward-looking statements contained in this presentation. For a discussion identifying additional important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, see the company's filings with the U.S. Securities and Exchange Commission including, but not limited to, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2020 and subsequent quarterly reports on Form 10-Q. The company's filings may be accessed through the Investor Relations page of its website, www.lockheedmartin.com/investor, or through the website maintained by the SEC at www.sec.gov. The company's actual financial results likely will be different from those projected due to the inherent nature of projections. Given these uncertainties, forward-looking statements should not be relied on in making investment decisions. The forward-looking statements contained in this presentation speak only as of the date of its filing. Except where required by applicable law, the company expressly disclaims a duty to provide updates to forward-looking statements after the date of this presentation to reflect subsequent events, changed circumstances, changes in expectations, or the estimates and assumptions associated with them. The forward-looking statements in this presentation are intended to be subject to the safe harbor protection provided by the federal securities laws. Chart 2 October 26, 2021#3. 3Q 2021 Overview Achieved Sales of $16.0 Billion Achieved Segment Operating Profit* of $1.9 Billion and Earnings Per Share of $2.21 • Generated $1.9 Billion in Cash From Operations, Returned $1.2 Billion of Cash to Stockholders Provided 2022 Trending Data Chart 3 *See Chart 15 for Definitions of Non-GAAP Measures October 26, 2021#43Q Sales and Segment Operating Profit* ($B) Sales Segment Operating Profit $20.0 $2.0 $1.9B $1.8B $16.5B $16.0B $15.0 $1.5 $10.0 $5.0 $1.0 $0.5 $0.0 $0.0 3Q 2020 3Q 2021 3Q 2020 3Q 2021 Sales Impacted by Lower than Expected Supply Chain Activity; Profitability Reflects Strong Operational Performance Chart 4 *See Chart 15 for Definitions of Non-GAAP Measures October 26, 2021#53Q Diluted Earnings Per Share ($EPS) Chart 5 $8.00 $6.93* $6.00 $6.25 Non-Cash Pension Settlement Charge $4.72 $4.00 $2.00 $0.00 3Q 2020 $2.21 3Q 2021 Pension Transaction Impacted 3Q EPS *Diluted EPS - Adjusted. See Chart 15 for Definitions of Non-GAAP Measures October 26, 2021#63Q YTD Cash Returned to Stockholders ($M) Cash From Ops $4,953M $6,000 Less CapEx (915) 150% Free Cash Flow* $4,038M $5,000 Total Cash Returned $4,178M $4,000 (% FCF*) 100% 103% $3,000 $2,178M Dividends $2,000 50% $1,000 $2,000M Shares $0 0% 3Q YTD 2021 Share Repurchases Dividends Increased Share Repurchase Authority & Dividend Chart 6 *See Chart 15 for Definitions of Non-GAAP Measures October 26, 2021#72021 Outlook Update ($M, Except EPS) Sales Prior Outlook October 2021 Outlook $67,300-68,700 ~$67,000 Segment Operating Profit* $7,380 - $7,520 ~$7,350 Net FAS / CAS Pension Adj.** ~$655 ~$665 Diluted EPS Cash From Operations - $21.95 $22.25 $22.45 ≥ $8,900 ≥ $8,300 *See Chart 15 for Definitions of Non-GAAP Measures Chart 7 **See Chart 17 for FAS/CAS Details October 26, 2021#82021 Sales Outlook ($M) Sales (Prior) Sales (Current) Space $11,900 - 12,200 Aeronautics Aeronautics Space ~$11,850 $27,200-27,600 ~$26,750 RMS MFC $16,575-16,975 $11,625 - 11,925 RMS ~$16,775 MFC ~$11,625 $67,300-68,700M ~$67,000M Supply Chain Impacting Aeronautics, MFC & Space Chart 8 October 26, 2021#92021 Segment Operating Profit* Outlook ($M) Segment Op Profit (Prior) Segment Op Profit (Current) Space $1,155-1,185 Space Aeronautics $2,835 2,875 Aeronautics -$2,800 ~$1,135 RMS $1,760-1,800 RMS ~$1,780 MFC $1,630 1,660 MFC ~$1,635 $7,380-7,520M ~$7,350M Segment Operating Profit Change Driven by Volume Chart 9 *See Chart 15 for Definitions of Non-GAAP Measures October 26, 2021#10Preliminary Trends - 2022 2022 Outlook • Sales ~$66 Billion • Segment Operating Margin* ~11% ● ● Cash from Operations ≥ $8.4 Billion • Excludes up to ($2.0) Billion Potential R&D Capitalization Tax Impact • Maintain ~$1.5 Billion of Accelerated Payments to Supply Chain No Pension Contributions Statutory Tax Rate of 21% Excludes Aerojet Rocketdyne - Pending Closure 1Q 2022 FAS/CAS Outlook** • 2022 Net FAS/CAS Pension Adjustment ~$2.2 Billion Assumes 2.75% Discount Rate at Year-End 2021 • Assumes 10.0% Return on Plan Assets in 2021 Assumes 6.5% Long-Term Return on Assets Chart 10 *See Chart 15 for Definitions of Non-GAAP Measures; **Chart 17 for FAS/CAS Details October 26, 2021#11Capital Deployment Full Year 2022 ● . ● Capital Expenditures ~$2.0 Billion Independent Research & Development ~$1.5 Billion Dividend Payments ~$3.0 Billion Next 12-18 Months ● Up to $6.0 Billion in Share Repurchases Disciplined and Dynamic Capital Allocation Strategy Chart 11 October 26, 2021#12F-35 Deliveries & Revenue Trending $20 '20 - '26 CAGR Sustainment -6% $15 Development ~1% $10 Production Flat $5 $0 2020 2021E Deliveries 120 2022E 133-139 151-153 2023E 2024E 2025E 2026E 156 156 156 156 Forecasting ~1.5% Overall CAGR for F-35 Thru 2026 Chart 12 October 26, 2021#13Summary • 2021 Sales, Segment Operating Profit* and Cash From Operations Adjusted for Supply Chain Impacts • 2022 Trending Reflects Supply Chain Impacts, F-35 Production Update, and Other Recent Events ● Strong Operating Cash Flow and Balance Sheet Enable Substantial Reinvestment in the Business and Robust Returns to Shareholders Positioning Portfolio for Long Term Growth and Value Chart 13 *See Chart 15 for Definitions of Non-GAAP Measures October 26, 2021#14Financial Appendices Chart 14 October 26, 2021#15Definitions of Non-GAAP Measures 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 Lockheed Martin, this information should be considered supplemental and is not a substitute for financial information prepared in accordance with GAAP. In addition, our definitions for non-GAAP measures may differ from similarly titled measures used by other companies or analysts. Free Cash Flow Lockheed Martin defines Free Cash Flow (FCF) as Cash From Operations less Capital Expenditures. Diluted Earnings Per Share (EPS) - Adjusted Diluted EPS-Adjusted represents Diluted EPS adjusted for the third quarter 2021 noncash, non-operating pension settlement charge of $1,665 million ($1,310, or $4.72 per share, after tax). Segment Operating Profit / Margin Segment Operating Profit represents the operating profit from our business segments before unallocated income and expense. This measure is used by our senior management in evaluating the performance of our business segments and is a performance goal in our annual incentive plan. The caption "Total Unallocated Items" reconciles Segment Operating Profit to Consolidated Operating Profit. Segment Margin is calculated by dividing Segment Operating Profit by Sales. Mid-point Segment Margin represents the mid-point of the outlook range for Segment Operating Profit divided by the mid-point of the outlook range for Sales. ($ Millions) Sales Segment Operating Profit Mid-Point Segment Margin FAS/CAS Operating Adjustment Other, net Consolidated Operating Profit 2021 Outlook (August) $67,300 68,700 $7,380 7,520 11.0% ~$1,955 ~($300) $9,035-9,175 3Q 2021 2021 Outlook (October) ~$67,000 ~$7,350 11.0% ~$1,955 ~($230) ~$9,075 3Q 2020 Profit Segment Operating Profit Sales $ 16,028 Total Unallocated Items Consolidated Operating Profit (GAAP) $ 16,028 Profit $ 1,850 444 $ 2,294 Margin 11.5% Sales $ 16,495 Margin $ 1,762 10.7% 385 14.3% $ 16,495 $ 2,147 13.0% Chart 15 October 26, 2021#16Appendix I ($M, Except EPS, Margin and Effective Tax Rate) Sales Segment Operating Profit* Mid-Point Segment Margin 2021 October Outlook ~$67,000 ~$7,350 11.0% FAS/CAS Operating Adjustment** Other, net ~1,955 ~(230) Consolidated Operating Profit $9,075 Non-Operating FAS Pension Expense** ~(1,290) Non-Service Costs for Other Post Retirement Plans ~5 Effective Tax Rate ~15.9% Diluted EPS $22.45 Pension Contribution $0 *See Chart 15 for Definitions of Non-GAAP Measures Chart 16 **See Chart 17 for Appendix II for more detail October 26, 2021#17Appendix II ($M) 2021 Outlook Total FAS income and CAS costs FAS pension income Pension Settlement Charge Less: CAS pension cost Net FAS/CAS pension adjustment Service and non-service cost reconciliation FAS pension service cost Less: CAS pension cost FAS/CAS operating adjustment Non-operating FAS pension income. Net FAS/CAS pension adjustment $ 265 2 2 22 2 (1,665) 2,065 $ 665 $ (110) 2,065 1,955 (1,290) $ 665 The corporation records the non-service cost components of net periodic benefit cost as part of other non-operating income, net in the consolidated statement of earnings. The non-service cost components in the table above relate only to the corporation's qualified defined benefit pension plans. The corporation expects total non-service income for its qualified defined benefit pension plans in the table above, along with non-service cost for its other postretirement benefit plans of $5 million, to total non-service cost of $1,285 million for 2021, inclusive of pension settlement charge. Chart 17 October 26, 2021#18Appendix III Pension Cash Funding vs CAS Recovery ($B) $2.5 $2.1 $2.0 $1.8 $1.6 CAS $1.4 $1.5 Recovery $1.0 $0.5 Cash Funding $0.0 2021E 2022E 2023E Assumptions: Assumes 2.75% Discount Rate at Year-End 2021 Assumes 10% Return on Plan Assets in 2021 Assumes 6.5% Long-Term Return on Assets Chart 18 $0.8 2024E 2025E October 26, 2021#19FAS/CAS Pension Income CAS (Cost) / FAS Income ($B) $3.0 $2.0 2.3 2.2 $1.7 FAS / CAS 2.3 2.0 Settlement Charge $1.0 FAS 1.3 0.7 0.7 0.3 0.4 0.6 0.5 $0.0 2021E 2022E 2023E 2024E 2025E ($1.0) (0.8) CAS (1.4) ($2.0) (1.8) (1.6) (2.1) ($3.0) Chart 19 October 26, 2021#20Empty