Thank you all for joining us for the Lockheed Martin First Quarter 2020 Earnings Results Conference Call. I will now hand it over to Mr. Greg Gardner, Vice President of Investor Relations. Please proceed.

Thank you, John, and good morning. I'd like to welcome everyone to our first quarter 2020 earnings conference call. Joining me today on the call are Marillyn Hewson, our Chairman, President and Chief Executive Officer; and Ken Possenriede, our Executive Vice President and Chief Financial Officer. With safety and caution in mind during these unusual times, we are using a more virtual approach in exercising social distancing while conducting this call. Statements made in today's call that are not historical fact are considered forward-looking statements and are made pursuant to the safe harbor provisions of federal securities law. Actual results may differ materially from those projected in the forward-looking statements. Please see today's press release and our SEC filings for a description of some of the factors that may cause actual results to differ materially from those in the forward-looking statements. We have posted charts on our website today that we plan to address during the call to supplement our comments. These charts also include information regarding non-GAAP measures that may be used in today's call. Please access our website at www.lockheedmartin.com and click on the Investor Relations link to view and follow the charts. With that, I'd like to turn the call over to Marillyn.

Good morning, everyone, and thank you for joining us today. I hope this call finds you and your family safe and healthy as we collectively work to address the many issues brought on by the coronavirus outbreak. Our nation and the global community have seen the dramatic effects of the COVID-19 crisis. We are all saddened by the rise in illness and the tragic loss of life that has resulted from it, and our Lockheed Martin family has not been spared from this pandemic. The world continues to battle this disease, with experts predicting improvements will be seen in the coming weeks and months. And while this is certainly encouraging, we must remain vigilant to ensure progress is achieved. The corporation is taking necessary steps to help combat this virus and keep our employees safe while assuring our customers can achieve their important readiness and mission requirements. We are beginning to experience some issues in each of our business areas related to the coronavirus, primarily in access to some locations and delays of supplier deliveries, which have caused us to adjust our full year sales outlook, and we will discuss that later in the call. Our teams are successfully addressing many of the risks that have arisen due to the COVID-19 impacts. Our manufacturing facilities are open, and our workforce is engaged. The situation will evolve, and we will continue to monitor our business environment for areas of concern. The corporation remains committed to delivering the products and services needed for our customers and to maintaining a safe and healthy workplace for our employees. In recognition of this unprecedented situation, the U.S. government has taken several actions that continue to reinforce the importance of our nation's defense industry. The Department of Homeland Security deems the defense industrial base to be part of the nation's essential critical infrastructure. And the Department of Defense has issued guidance that confirms the expectation that companies providing products and services in support of national security continue to maintain staffing and work schedules to perform their crucial functions. The DoD also published a deviation on progress payments memo, issuing a blanket increase to progress payment rates for both large and small businesses. Stable and reliable cash inflows provide needed visibility for all businesses and will be especially important to many small and medium-sized suppliers. These actions underscore the country's commitment to our industry and importantly, to our supply chain, which provides tremendous innovation and strength to our national security products. The international community is also deeply affected by this crisis. And our company is committed to perform with excellence for our global customers and to support the health and well-being of our employees around the world. The corporation is taking steps to aid our employees, teammates and others. And in a few moments, I will discuss some of the actions we have taken to help provide support to those affected by this crisis. I will touch briefly now on the Department of Defense budgets and the recent presidential budget submission. This quarter, the President submitted the fiscal year 2021 budget recommendation to Congress, consistent with the Bipartisan Budget Act of 2019 enacted values, with the total national defense request equaling approximately $741 billion. Notably, the DoD reiterated their commitment to the national defense strategy and their submission, with the space domain, air and missile defense and hypersonic programs, key pillars in their strategy and our portfolio, all receiving increases from the previous submissions. Congress will continue to process with the authorization and appropriations phases. Our programs remain well supported, and our portfolio is broad and expanding. We look forward to the finalization of the process and supporting our warfighters' needs. Ken will review our first quarter financials and updated full year outlook in more detail in a few minutes. I would like to begin by noting that the disruptions introduced by this virus have caused us to reduce our 2020 sales expectation as production and supply chain activities have recently slowed in our Aeronautics business area. The changes in our outlook represent impacts we anticipate being recognized over the remainder of the year. We are not projecting any changes due to our expected full year operating profit, earnings per share and cash from operations outlooks that we set forth in January. Our results this quarter were very strong. Sales in the quarter exceeded last year's first quarter by more than 9%, led by our Aeronautics team as the Aeronautics business area grew 14% from the first quarter of 2019. Our segment profit came in just above the first quarter 2019 amount as risk retirements in all business areas allowed us to exceed our expectations in this quarter. And we had a strong quarter of cash generation, bringing in over $2.3 billion of cash from operations as we look to achieve our full year target of greater than or equal to $7.6 billion. Moving to orders and backlog. We received more than $15 billion in orders this quarter, maintaining our backlog at approximately $144 billion, our all-time high. RMS garnered the largest set of awards, with the total exceeding $7 billion, led by our Sikorsky organization, which booked over $4 billion of orders, including over $2 billion for a performance-based logistics contract for the U.S. Navy to provide sustainment services on our MH-60 SEAHAWK platform; an award of $500 million for the second low-rate initial production, or LRIP, contract for 12 combat rescue helicopters; and a $470 million award for LRIP 2 of the presidential helicopter contract, adding 6 aircraft to the program and bringing the total order to 12 rotary aircraft out of a total program of record of 23 aircraft. Aeronautics also had a strong quarter, with aggregate F-35 orders approaching $900 million. Other awards, including a new classified order, brought the Aeronautics business area total to $3.6 billion for the quarter. Missiles and Fire Control received a pair of sizable awards this quarter, led by precision fires, which booked a $1.1 billion order to supply guided multiple launch rocket systems to the U.S. Army and international customers. MFC also received an order for over $900 million to provide FAD interceptors and equipment to the U.S. Army and the Kingdom of Saudi Arabia. And our Space business area received a fleet ballistic missile order of $600 million for continued Trident II production. Our performance to date and resilient portfolio have positioned us to achieve strong results so far this year. The effects of the COVID-19 outbreak are being felt by our teams, but we remain committed to delivering the vital solutions that our customers require. This pandemic has caused dramatic impacts to our employees and their families, our customers, our supply chain and the communities in which we work and live. Our corporation is committed to using our know-how, resources, and leadership to assist during this global crisis. Lockheed Martin is implementing multiple actions to help support affected groups, including accelerating payments of over $150 million to our small and medium-sized supply chain partners, and we have already flowed the first $50 million of an additional $450 million in accelerated payments to our global supply base as a result of the actions taken by the Department of Defense in changing the progress payment policy that I mentioned a moment ago. We have also donated $10 million to nonprofit organizations involved in COVID-19-related relief and assistance with an emphasis on veterans and military families. And we have activated a $6.5 million employee disaster relief fund to assist Lockheed Martin employees and retirees impacted by COVID-19. In addition to supporting our global customers through our ongoing contract activity performance, we recognize that providing jobs during this period of economic downturn is also critically important. We are committed to continued hiring during this crisis and have added close to 1,000 new employees over the past few weeks, in addition to advertising for 5,000 open positions. The journey to full recovery will be one that we will all share together. Lockheed Martin is committed to performing with excellence for our stakeholders as we navigate through this crisis in the weeks and months ahead. Moving on, I would like to highlight several significant events that occurred across the corporation during the past quarter, beginning with Aeronautics. We were excited by two significant milestones for the F-35 that show the program's continued maturation and ongoing demand. In February, the F-35 team celebrated surpassing 250,000 flight hours for the program, including developmental test jets, training and operational U.S. and international aircraft. The program has now trained more than 1,000 pilots and in excess of 9,000 maintainers as this unrivaled stealth fighter progresses towards full-rate production. In March, the F-35 team delivered the 500th production joint strike fighter aircraft, a conventional takeoff and landing variant for the Air National Guard. Production continues to ramp as we progress towards the joint government and industry plan of record for delivery of more than 3,300 aircraft. Moving to RMS. This quarter, our Sikorsky line of business was down-selected in two key rotary wing competitions for the Future Vertical Lift program. The Sikorsky-Boeing team was awarded one of two future long-range assault aircraft contracts to continue design and risk reduction efforts on the next-generation medium-lift helicopter for U.S. forces. Our SB>1 DEFIANT offering uses our Collier award-winning X2 Technology providing enhanced maneuverability and speed. We look forward to working with our Army customer as we collectively define the next-generation assault aircraft for our warfighter. We were also excited to be down-selected in the Future Attack Reconnaissance Aircraft Phase II competition. The Sikorsky RAIDER X rotorcraft uses the same unique technology as the SB DEFIANT and provides the same speed and maneuverability advantages. Each of these competitions represents long-term growth opportunities, and our Sikorsky organization has been investing for years in pursuit of innovative technologies and designs to fulfill the warfighters' objectives. Our Space business area celebrated a pair of milestones this quarter as well as the first two GPS-III spacecraft were each separately accepted into operations by the U.S. Air Force Space Command as healthy and active, officially joining the current GPS constellation of 31 satellites. These are the first two of ten modernized GPS-III space vehicles that will be deployed to enhance navigation and positioning capabilities for millions of users. The next-generation GPS-III program will deliver signals three times more accurate than the current satellites with improved availability, reliability, and anti-jamming capabilities for our military users. And we are proud to continue this legacy of innovation for our warfighters. In Missiles and Fire Control, you may recall last quarter, we commented that Missiles and Fire Control have passed an important milestone on the U.S. Army's Precision Strike Missile, or PrSM, competition. This quarter, our tactical missiles organization performed its second consecutive successful flight test of this next-generation, long-range precision missile. Our team demonstrated the missile's flight trajectory, range in accuracy and overall missile performance from launch to the conclusion of the mission. We look forward to building on our long-running army tactical missile system legacy in preparation for our third PrSM flight test in the coming weeks as we continue to pursue this potential franchise opportunity. And with that, I'll turn the call over to Ken.

Thanks, Marillyn, and good morning, everyone. As I highlight our key financial accomplishments, please follow along with the web charts that we've included with our earnings release today. Let's begin with an overview of our results for the quarter. We saw strong results in sales, segment operating profit, cash from operations, and earnings per share this quarter. We generated $2.3 billion of cash from operations, and we continued our balanced cash deployment actions, returning $1.4 billion to our shareholders. Our backlog closed just above $144 billion, exceeding our all-time high for the corporation. We have updated our outlook to include impacts from COVID-19, which we will discuss in greater detail shortly. Overall, it was still a strong quarter for the business during uncertain and unique times. Comparing our sales and segment operating profit this year with last year's results, sales grew 9% to $15.7 billion, continuing the consistent growth of the business, while segment operating profit was $1.7 billion, resulting in a strong segment operating margin of 11%, ahead of our expectations. Our earnings per share for the first quarter was $6.08, up $0.09 over last year, driven by FAS/CAS income and favorable operational performance. This quarter, after subtracting our capital expenditures from approximately $2.3 billion of cash from operations, our free cash flow was greater than $2 billion. We maintained our dividend at $2.40 per share and repurchased $756 million worth of shares, bringing our total cash return to shareholders to $1.4 billion for the quarter, or 72% of free cash flow. We see no change to the $1 billion share repurchase outlook for 2020. Our backlog balance increased for the seventh consecutive quarter, driven by bookings at Sikorsky and missile programs. Based on our view of COVID-19-related potential impacts, we are lowering the midpoint of our guidance range on sales by $375 million while holding our guidance for segment operating profit, earnings per share, and cash from operations. Our joint venture AMMROC in the UAE lost a key contract award after the end of the quarter, and we are assessing a potential non-cash impairment that could be recorded soon. Likely COVID-19 impacts on our supply chain have caused us to reduce our full year outlook for Aeronautics, while expectations for 2020 sales in all other business areas remain unchanged. The guidance for profit has been lowered for Aeronautics, but we have raised our guidance range for Missiles and Fire Control and Space, keeping our total segment operating profit consistent with January's outlook. We are continuously monitoring the situation as it remains dynamic. Our current expectation is that the next few months will be the peak of disruption as efforts to flatten the curve continue. The Department of Defense and the United States government have taken action to support our industry, and our outlook reflects these benefits. All these actions have allowed us to update our January outlook with minimal impacts. In summary, the first quarter has laid the foundation for a strong year. We have a robust backlog to sustain our growth, and our sales outlook shows an approximately 6% increase from 2019. With consistent profit and positive cash flow, we project strong results for 2020 as we continue to support our employees, customers, and supply chain during these times. Before we move to Q&A, I want to congratulate Marillyn on her upcoming transition and thank her for her outstanding leadership. Under her guidance, the corporation has achieved remarkable results. During your 37 years with the company, employees, customers, teammates, and shareholders have benefited from your dedication, inspiration, and vision. I will miss your friendship and partnership, but we look forward to continuing to work with you as Executive Chairman of the Board. I also want to welcome Jim Taiclet as our incoming President and CEO starting June 15. I believe he will be an outstanding leader for the company. I wish Marillyn the best of luck and look forward to welcoming Jim in June. John, we are ready to begin the Q&A.

And first, we have Joe DeNardi from Stifel on the line.

Okay. Ken, there's language in the release and you kind of alluded to in your prepared remarks regarding the guidance and kind of reflects your current view on COVID-19. Can you talk about how sensitive the guidance is to duration? Maybe help us a little bit more with kind of what you're assuming for what a return to normalcy looks like. Do you see the effects of this in terms of fixed price contract costs increasing your ability to recover that? Just trying to understand your perspective on how this impacts kind of earnings power and cash flow power longer term.

Thanks, Joe. To start off, once the situation began, we implemented a weekly tracking process for COVID-19 impacts across all business areas. We developed a template to collect data for various internal and external reports. Marillyn is now sending a weekly memo to the Service Acquisition Executives outlining the impacts we observe and the actions we're taking to mitigate them. This input relates to our contracts at the program level, covering about 600 line items that monitor actual and potential impacts driven by our suppliers and government. The weekly template reflects the risks we're facing, primarily related to travel restrictions and site access, which have led to supplier shortages and absenteeism at our sites. However, there are some positive developments. The customer has increased the progress payment rate from 80% to 90%, and they've adjusted some conditions regarding progress payments in a way that will benefit us. We're working to ensure this heightened cash flow reaches our supply base, starting with small and vulnerable suppliers through a coordinated process with our supply chain and Treasury. Additionally, we are accelerating contract actions with our customer, which include timely awards and funding. Internally, we're capturing cost avoidance from reduced travel and other associated expenses, which we aim to leverage to mitigate disruptions to our business rather than impact our bottom line directly. Regarding the CARES Act, we plan to work with the Procurement Contracting Officer to request adjustments for idle costs which we believe should be allowable. We have a clear path forward with the F-35 program in this regard. We anticipate that conditions will improve by the second quarter, allowing us to return to a more normal business operation by the third quarter. In terms of cash, we are optimistic and have had a strong start to the year, maintaining solid cash flow as we move ahead. Thanks, Joe. Stay safe.

And next, we'll go to Hunter Keay with Wolfe Research.

I guess I'm tempted to ask that cash question, but I'll let somebody else do it. I'll ask what I was going to ask you before. Can you talk about the F-16? I'd like to talk about how that move to Greenville is going for one and how you think about the F-35 in the context of the F-16 sort of a growth versus replacement-type situation, both near and medium and long term.

Hunter, we'll give Marillyn a break since it's her last earnings call. So I'll take that. So it's going well. So as everybody is aware, I believe, we moved the F-16 program out of Fort Worth a couple of years ago. Frankly, no home because we didn't have any orders of record and Bahrain was our first customer. We moved the line to Greenville, going very well. Right now, we have Bahrain. You saw we just announced Bulgaria. We have Slovakia. We're in the throes of working with the United States government and Taiwan for them to buy 66 aircraft. There is an African country that is interested in F-16. So we're hopeful that will happen. South American country, and then there are some Southeast Asian countries that are interested in F-16 as well. So we think the program is doing very well. The MOD programs are doing very well. Just in the spirit of COVID, we're not seeing many impacts at all on the F-16 program. So I think this is a good fourth-generation aircraft for those customers that can't afford the F-35 or, frankly, can't at this time buy the F-35. And it might be a good intermediary step for customers to go from the F-16 to F-35. So we see it frankly as complementary and not competing against themselves.

The next question is from Doug Harned with Bernstein.

First, Marillyn, it's been great working with you over the years. So just wanted to wish you all the best in the transition. I wanted to ask about international sales. And particularly, when you look at the Middle East, I thought it was encouraging that you got this award from Saudi Arabia. But when you look at oil prices where they are today, in the past, we have seen budgets contract when oil prices come down. How are you thinking about the Middle East right now given the oil price environment? And even expand that to say with coronavirus issues in other markets and budgets that may be under pressure, what are you seeing internationally in your export sales?

Thank you for the question, Doug. I want to emphasize that despite the fluctuations in oil prices and other factors, global threats continue to escalate. This remains a challenge worldwide, as countries prioritize the protection of their citizens. Many of the systems we supply to the Middle East are primarily defensive, and the situation there is more complex, volatile, and unpredictable than ever. Ensuring national security is a critical requirement for these countries, and I anticipate this need will persist. We will continue to focus on making our products more affordable to provide the best value to these nations, but we are not observing any decline in their current needs in the Middle East.

And next, we'll go to Sheila Kahyaoglu with Jefferies.

Marillyn, you've had an amazing career, and it's apparent in Lockheed's success in both the top line and operations. I guess as you exit on top, how do you think about the challenges for Jim in areas you would have liked to spend more time with on Lockheed and position better for the next 5 years? How does Lockheed continue to grow over the next decade?

Thank you, Sheila, for your kind words. I believe this is an opportune moment for a transition in our company, as we are strong and stable. Our performance has been solid, and we have a robust growth strategy that continues to show results this year. We concluded last year with record performance and have had a strong track record over the past few years. Our $144 billion backlog illustrates our booked work and solid financial position. As Jim steps into his new role, he has been on our Board for over two years and brings relevant experience from his military background, as well as from companies like Pratt & Whitney and Honeywell. His insights from serving on our Board will enhance our strategy and long-range plans. I am confident he will drive the ongoing success we've experienced. He aligns well with our culture and has strong business acumen, having been a CEO for 17 years. Our priorities will remain focused on strengthening customer relationships, which have been crucial to our success. We will continue to align with their needs, ensuring sustained profitable growth, and delivering the performance they expect, as they rely on us. Our role is vital in the national security sector due to the products and capabilities we provide. Performance and innovation for our customers must persist. Lastly, we'll maintain our focus on our employees, who cultivate an innovative culture that makes a difference. I believe Jim, with his value-based and collaborative leadership style, will continue to foster this culture. As I transition leadership to Jim in mid-June, we are well positioned for the future.

And our next question is from Pete Skibitski with Alembic Global Advisors.

Congratulations, Marillyn, on a great career. On the COVID-related sales reduction in Aerospace, I just want to make sure I understand. Was the guidance lowered there due to the international F-35 sites, Italy and Japan sites? And why were the other segments not impacted?

Sure. Pete, it's Ken. I'll take that. Let's discuss Aeronautics first, followed by other business areas. We've observed that supply chain disruptions are likely to occur. Stricter local distancing requirements are being applied worldwide, leading to workforce disruptions and potential impacts throughout the supply chain. There are also shipping constraints we've encountered, and we anticipate production impacts at our site. Due to these factors, we've reduced our guidance for Aeronautics, particularly regarding F-35 production. We plan to conduct further analysis over the next few weeks in collaboration with our supply chain, production line in Fort Worth, and our customers to assess the extent of any impact on the program, including deliveries. Last night, I received feedback from the supply chain team about F-35 production. We're facing some pressure concerning supplier performance-based payment invoices, which are submitted after milestones are completed. A few suppliers may be delinquent in April, some due to administrative reasons that we'll resolve, but others, both domestic and international, are behind on milestones, likely due to COVID-related issues. We are reviewing this closely. We conducted sensitivity analyses with the Aeronautics team, and concerning F-35, we see little to no impact on development work. We can continue with follow-on modernization efforts typical for development programs. Sustainment appears unaffected, and if any costs arise related to personnel unable to fulfill onsite repair duties, we believe those costs are recoverable due to the CARES Act. In the past, we encountered some impacts at the Japanese and Italian FACOs, but thankfully, they are now operational. Based on our assessments, we deemed it prudent to lower our production sales guidance. We hope this revised number is conservative and reflects current conditions effectively. Regarding the other business areas, let’s start with Space. They have a long production cycle and believe they can manage any supply chain issues effectively. Since their production volume is much lower compared to the F-35 line, they have been able to navigate current challenges. Their engineering workforce, which was the first to be affected by COVID-19, is now staggering shifts and office attendance, leading to some impact on classified programs, but they are managing it well. For RMS, they don't have the same volume as Fort Worth, and their manufacturing setup is more akin to Marietta. We are experiencing some supplier-related challenges, but we have workarounds in place. Modest impacts are noted at Marietta, but they are not significant. The RMS engineering team remains productive, and while there are some range and base closures affecting them, we don't foresee any major impacts. Our next area of concern is Missiles and Fire Control, primarily due to their high-volume operations. They have effectively engaged with all their suppliers, and while we initially noted that 6% were forecasting impacts, that figure has since risen to 10%. There were two suppliers that temporarily closed operations; one is still being addressed while the other, based in Mexico, is now operational again. We feel positive about the current guidance for Missiles and Fire Control. Overall, we are confident in our guidance across the other three business areas. We believe we have adequately addressed the Aeronautics challenges and have assessed risks and opportunities throughout our portfolio, ensuring we remain well-positioned today.

Next, we'll go to David Strauss with Barclays.

Congrats and well done, Marillyn. I'll take the bait, Ken, on cash. I think you were talking about a little bit more than a $700 million working capital headwind or increase this year. How are you thinking about that now on the back of COVID-19? And maybe comment on Q1, you saw a big increase in your payables balance.

You bet. Thanks, David. We feel confident about cash flow this year. If it wasn't for COVID-19, we would have been very comfortable projecting cash from operations of over $7.6 billion. As we moved into the first quarter, we did increase payables, having paid down some in the fourth quarter. The strong performance in Aeronautics and a couple of other business areas was partly due to receiving invoices late in the quarter, leading to unusually high payables that contributed to inventory and contract assets, which we see as a future opportunity. Despite the impacts of COVID, we anticipate working capital increases over time, particularly in contract assets, primarily related to the F-35, and we believe we can reduce those assets. The elevated payables in the first quarter were primarily because the actions to support the supply chain, as mentioned by Marillyn, didn't fully initiate until the second quarter. We plan to continue distributing the committed $450 million throughout the second quarter and likely into the third and fourth quarters as well, and we expect to reduce our normal payables in the fourth quarter by accelerating payments to small businesses and vulnerable suppliers.

And we'll go to Rob Stallard with Vertical Research.

Marillyn, all the best for the future, but I have a final question for you. And it's a little bit tricky. I was wondering what's your gauge of the political environment at the moment, whether it's, what you might say, politically acceptable for the companies to be buying back stock given the crisis the country is going through.

Thank you for your comments, Rob, and for the question. The current political environment is challenging, especially for companies facing a lack of demand. Since everything shut down, I am glad to be part of discussions with the President's task force and others to collaborate with governors and the President on strategies to safely and effectively restart the economy. As we have mentioned, we have continued our operations during this period. Our focus has been on ensuring the safety of our workforce, maintaining our operations, and managing supply chain issues, as Ken highlighted. Regarding the political environment, it seems companies are looking for support from the CARES Act and other measures to assist their businesses. It appears they do not intend to reduce stock buybacks under these circumstances, as they genuinely need that funding to meet their business and cash flow requirements and to bring their employees back since their demand has dropped significantly. This situation is quite different from typical companies that plan their yearly cash deployment through dividends, stock buybacks, and capital investments. In our case, we have not altered our approach. We committed in October to around $1 billion in stock repurchases, and we remain committed to that for this year. We believe we are in a different position compared to those significantly impacted by reduced demand. Ken, would you like to add anything regarding our situation?

Sure. Last year, we initiated a 10b5-1 plan, which is an enhanced open market repurchase program. We approached the banks last year with a plan to buy back between $500 million and $600 million of stock starting in January and continuing through July. By the end of the first quarter, we had repurchased $256 million of the total $756 million reported for that quarter. Early this year, we opted for an automatic approach, having previously conducted a similar program in the fourth quarter of last year. This means we provided the funds upfront, allowing the bank discretion in executing the buybacks. That initiative is set to conclude at the end of April, which explains the $756 million in repurchases for the quarter. We reaffirmed our $1 billion repurchase commitment that will continue automatically through July, aiming for another $244 million in buybacks over the next couple of months to reach that target. Over the last couple of years, we've focused on preventing dilution of our share count through these buybacks. If circumstances allow post-COVID, we may reconsider this strategy to opportunistically repurchase shares again. In the interim, our priority is to enhance our balance sheet for cash flow and support our distressed and small suppliers. Regarding dividends, we're planning, pending Board approval, to continue declaring and paying them, which is part of our modeling for the year. Additionally, we're investing around $1.3 billion in IRAD and are on track to spend roughly $1.7 billion on CapEx, demonstrating our commitment to our supply chain and essential investments for a thriving future.

Next question is from Peter Arment with Baird.

Congratulations on your success, Marillyn. Ken, I have a question about the backlog. You have a stable backlog, and I believe the expectation for 2020 was to see growth of $3 billion to $4 billion. Is that still on track? Additionally, are there any significant international awards that we should be aware of that might influence that growth?

Thank you, Peter. We still anticipate growing our backlog. As I mentioned earlier, we're collaborating with a U.S. customer to accelerate orders and improve our backlog situation. You may have noticed we completed the F-35 Lot 14 order in the second quarter, which includes some international customers—about 35% to 40% of those aircraft will go to them. We have several international orders that we feel optimistic about. For instance, we finalized the F-16 deal with Bulgaria for 8 aircraft. We're also working with Indonesia on C-130 aircraft and are confident in that partnership. There was recent news regarding funds flowing from India for the MH-60R multi-role helicopter program, and we'll engage with the relevant government agencies to finalize that contract. We are also positive about the F-110 frigate program in Spain and the F-16 order for Taiwan, which is scheduled for the third quarter. We're currently working on a few additional F-16 orders as well and expect a Norway contract in the fourth quarter. Overall, we are optimistic about our order book and, due to some accelerations, we believe we will surpass our planned orders this year by over $3 billion, primarily driven by PAC-3 orders from FY '21, where we have a strong relationship with the customer to expedite those orders.

Next question is from Carter Copeland with Melius Research.

Again, congratulations on all the accomplishments and the retirement. It's been quite impressive. So just want to kind of follow up a little bit on the award environment. And I think a little bit longer term, you hinted at it, Marillyn, on the plus ups and areas of emphasis and things that are in the NDS. And I just wondered if you might give us some color on how you see that influencing the opportunity pipeline that you've been talking about over the last several quarters, not just in hypersonics but also at MDA. And just anywhere you think that, that's unfolding in a way that's different as a result of the budget request.

Thank you for the question and the comment, Carter. I appreciate it. As mentioned in my opening remarks regarding the FY '21 budget, the President's budget request shows some slight growth, but we are still waiting on Congress to decide on the specifics for our programs. Currently, our programs are well-supported, but Congress often assesses and makes adjustments in certain areas. For instance, last year, they added 20 planes for the F-35 and have shown support in other areas over the years. We are optimistic about what the budget request contains, as it aligns with the national defense strategy and our portfolio. The budget includes over $3 billion dedicated to hypersonics, where we have demonstrated our leadership. Additionally, there is potential growth for NASA, particularly for Orion and Mars missions, with an increase of over $3 billion allocated for that. We are also looking at growth opportunities internationally, particularly through Foreign Military Sales. Poland has committed to 32 F-35 aircraft, and we see interest from Finland, Switzerland, Spain, and other countries regarding the F-35 to meet their fighter replacement needs. In missile defense, THAAD, PAC-3, and Aegis continue to present growth opportunities. Regarding Sikorsky, the Future Vertical Lift presents significant potential for growth, along with the CH-53K program for the Marine Corps, which has a 200-aircraft program. There is strong interest in Germany and Israel as well. Our Space business is also showing promising growth in space protection and various mission areas for national security. Overall, I am confident in our growth opportunities looking ahead, including next-gen OPIR and GPS contracts that continue to emerge. As Ken mentioned, we expect our backlog to increase and anticipate winning more opportunities at a good rate due to our strong portfolio. We have been investing for many years in hypersonics and other areas that position us well for substantial growth.

John, I think we have time for one more question.

And that will be from Ron Epstein with Bank of America Securities.

Marillyn, if you could speak to when you think about the impact that COVID's having on some of your international customers, meaning you've got F-35s potentially going different places in the world. And how do we think about the impact that that could have on those deliveries of aircraft?

Regarding our international operations, we have a few final assembly and checkout facilities located in Italy and Japan. Initially, these facilities experienced some downtime, but they are now fully operational. We have suppliers globally supporting our F-35 program and others, and we closely monitor their operations in various countries to ensure compliance with any constraints or safety protocols. We conduct weekly reviews of our supply base to stay informed about any potential disruptions. Furthermore, we are tracking transportation to ensure the efficient movement of parts and components. Countries continue to prioritize their national security needs, so I do not anticipate a significant impact on their procurement plans, even with economic challenges similar to those faced in the U.S. Our focus remains on maintaining a robust international supply chain. We have also been deploying cash to support suppliers globally, including international ones, and we expedite payments to both domestic and international suppliers. We are aware of the potential challenges they might face, including productivity issues and absenteeism. This has been a key area of focus for us. As we wrap up, I want to take a moment to express my gratitude as this is my last call as President and CEO. I appreciate the kind words from everyone, especially Ken, my colleague and friend. I want to thank the entire Lockheed Martin family for your dedication and support during my 7.5 years as CEO and over my 37 years with the company. Lockheed Martin is a strong corporation, known for its legacy of innovation and performance, poised for future growth. Looking back at my beginnings as an industrial engineer in Marietta, Georgia, I remember the dedicated people who made our work possible, including our current employees who make a difference daily. It has been an honor to be part of this team, which I consider a national asset due to the important work we do for our nation's defense and our allies. I want to thank our investment community and shareholders for their engagement and thoughtfulness, which has been invaluable to us. I am confident that Jim Taiclet will lead the company to continued success, as he brings an impressive track record to a company committed to excellence for our customers, employees, and shareholders. Lockheed Martin will be in good hands with Jim. Thank you for joining the call today, and we look forward to speaking with you during our next earnings call in July. That concludes our call.

Thank you. And ladies and gentlemen, you may now disconnect.