Quick Overview

  • Lockheed Martin's new Chief Financial Officer Evan Scott said during Tuesday's (April 22) earnings call that he feels 'comfortable' with the company's strategy to mitigate tariff impacts. Scott also agreed with an analyst's view that the defense industry is better shielded from such effects compared to other industrial companies.
  • Echoing statements made by many executives on calls after President Trump announced tariff measures on April 2, executives from the Bethesda, Maryland-based company also discussed the potential impact of tariffs during Tuesday's first-quarter call. CEO Jim Taiclet claimed the company is well-positioned in what he called a 'dynamic' environment.
  • The company also reaffirmed its 2025 financial outlook, with the caveat that it does not include the 'evolving impact of tariffs or related recoveries' and assumes program funding is fully provided at consistent levels by the Continuing Appropriations and Extensions Act, 2025, which Trump signed on March 15.

In-Depth Analysis

The earnings call came just days after Scott was appointed to replace Jesus 'Jay' Malave as the company's chief financial officer. Scott, who has been with Lockheed Martin for 26 years, assumed the role immediately, while Malave informed the company he is 'pursuing other opportunities.'

The company reported quarterly sales increased 4% year-over-year to $18 billion, with net profit rising to $1.7 billion from $1.5 billion in the same period last year.

'The strong profit achieved in the first quarter enhances our confidence in absorbing the currently estimated profit impact of 2025 tariffs and the 'end-get announcement,'' Scott said on the call. 'While completing a full business assessment of these dynamics will take more time, we are optimistic about achieving our annual profit targets.'

Scott also noted that the guidance includes several assumptions; for example, the company continues to expect deliveries of 170 to 190 aircraft for its F-35 fighter jet production business. He also mentioned that as of the end of last quarter, the company's backlog stood at approximately 360 aircraft.

He also stated that the outlook assumes a certain level of tariff impact, and the company expects to work closely with customers to mitigate potential cost increases and offset cash timing pressures. During the call, he also said that in many cases, the company will have 'direct protection' within its supply chain to avoid tariffs, asserting that 'for the vast majority of external contracts, we have mechanisms to recover the impact.'

'Is there a lag between incurring tariff costs and recovering those costs?' Scott asked on the call. 'So the situation will remain dynamic, but we believe there is now a good path forward, and we will continue to update progress as the year progresses.'