Lockheed Martin Corporation
LMT · NYSE
Next quarter
Expected to report Oct 20, 2026 — estimated from last year’s reporting date.
Consensus is $7.28 EPS for Sep 2026 across 7 estimates, ranging $5.80 to $7.75.
LMT Jun 2026
- 9.97%
- +2.46%
- $7.22
- $7.94
- —
- $20.06B
Reported results
- $20.06B
- 12.19%
- $2.48B
- 12.36%
- $1.84B
- $7.94
Highlights
- Quarterly performance: Sales rose 11% year over year to $20.06 billion, while diluted EPS was $7.94 versus consensus of $7.22, a 9.97% surprise.
- Guidance raised: Lockheed now expects 2026 sales of approximately $79.75-$81.75 billion, segment operating profit of $8.50-$8.70 billion, EPS of $29.95-$30.65 and free cash flow of approximately $7.00-$7.20 billion.
- Backlog and orders: New orders totaled $65 billion, lifting backlog to a record $230.4 billion, including a $35 billion multi-year THAAD interceptor contract; roughly 30% of backlog is expected to convert to sales within 12 months.
- Cash generation: Second-quarter operating cash flow was $3.24 billion and free cash flow was $2.92 billion, versus $201 million and negative $150 million, respectively, in the year-ago quarter.
- Munitions ramp: Missiles and Fire Control sales increased 19% to $4.10 billion and operating profit rose 24% to $594 million, driven by PAC-3, THAAD and PrSM production ramps.
- Segment recovery: Aeronautics returned to a 9.4% operating margin from negative 1.3% a year earlier, while Rotary and Mission Systems reached a 10.0% margin from negative 4.3%, largely because 2025 reach-forward losses did not recur.
- F-35 contribution: Aeronautics sales increased 9% to $8.11 billion, helped by $475 million of higher F-35 production volume; Lockheed delivered 19 F-35s during the quarter and ended with a backlog of 317 aircraft.
- Underlying caveat: The year-over-year profit comparison benefited from the absence of $1.62 billion of prior-year reach-forward losses and a $66 million impairment charge; 2026 also included unfavorable adjustments of $125 million on F-16, $95 million on Heavy Lift and $80 million on Seahawk programs.
Analysis
Lockheed Martin delivered a strong second quarter against expectations, with diluted EPS of $7.94 beating the $7.22 consensus by 9.97%. Sales reached $20.06 billion, up 11% from $18.16 billion a year ago and 11% from $18.02 billion in the first quarter. Operating income was $2.48 billion, versus $748 million in the year-ago quarter and $2.06 billion in Q1, while net earnings rose to $1.84 billion from $342 million and $1.49 billion, respectively. EPS increased from $1.46 a year ago and $6.44 in Q1.
The print was defined by broad volume growth, a sharp munitions ramp and unusually strong cash conversion. MFC sales grew 19% on PAC-3, THAAD and PrSM, while Aeronautics benefited from higher F-35 production and RMS recovered from 2025 helicopter-program charges. Comparability remains important: the year-ago period included $1.62 billion of reach-forward losses and $66 million of other charges. New orders of $65 billion lifted backlog to $230.4 billion, and management raised its full-year outlook, including free cash flow to $7.0-$7.2 billion from $6.5-$6.8 billion previously.
Results and outlook
The quarter combined double-digit sales growth with a substantial earnings rebound, although the year-ago base was depressed by major program charges. Consolidated operating margin improved to 12.4% from 4.1% a year earlier, and business segment operating margin increased to 10.8% from 3.1%. Sequentially, sales rose from $18.02 billion in Q1, operating income from $2.06 billion and EPS from $6.44. Management raised the midpoint of its sales outlook by $2.0 billion to approximately $80.75 billion, the segment operating profit midpoint by $50 million to $8.60 billion, EPS midpoint by $0.50 to $30.30 and free cash flow midpoint by $450 million to $7.10 billion.
Backlog and munitions
Demand and production capacity were the strategic center of the quarter. Lockheed booked $65 billion of new orders, increasing backlog by $36.8 billion from December 2025 to $230.4 billion. The increase was primarily tied to an undefinitized THAAD action, and the backlog includes a $35 billion multi-year contract with the Missile Defense Agency for THAAD interceptors. MFC sales rose $668 million to $4.10 billion, including $560 million from PAC-3 and THAAD ramps and $100 million from PrSM. The company expects to recognize about 30% of total backlog over the next 12 months and 50% over the next 24 months.
Segment execution
- Aeronautics: Sales increased 9% to $8.11 billion and operating profit reached $760 million versus a $98 million loss a year ago. F-35 production contributed $475 million of incremental sales, although F-16 and C-130 sustainment sales declined by $120 million.
- Rotary and Mission Systems: Sales rose 9% to $4.35 billion and operating profit was $437 million versus a $172 million loss. The comparison benefited from the absence of $570 million of CMHP and $95 million of TUHP reach-forward losses recorded in 2025; Heavy Lift and Seahawk generated $65 million and $50 million of unfavorable adjustments.
- Space: Sales grew 6% to $3.50 billion, driven by higher FBM and NGI volume, while operating profit was broadly unchanged at $371 million. The segment’s six-month profit was down 12% because of favorable commercial-space program completions in 2025.
- F-35: Lockheed delivered 19 aircraft during the quarter, bringing cumulative production deliveries to 1,344 and leaving 317 aircraft in backlog.
Cash flow and capital
Cash flow improved sharply, but management attributed much of the quarterly increase to the timing of customer receipts and lower tax payments. Second-quarter operating cash flow was $3.24 billion and free cash flow was $2.92 billion, compared with $201 million and negative $150 million a year earlier. Six-month operating cash flow was $3.46 billion and free cash flow was $2.63 billion, up from $1.61 billion and $805 million. Capital expenditures were $318 million in the quarter and $829 million year to date. Lockheed paid $1.6 billion of dividends during the first six months, made no open-market share repurchases and ended June with $3.8 billion of cash and $20.5 billion of net long-term debt.
Program and transaction risks
The improved results do not eliminate execution risk on complex fixed-price and development programs. Cumulative losses remained approximately $1.8 billion on the Aeronautics classified program, $1.5 billion on an MFC classified program and $670 million on CMHP, with $427 million, $1.1 billion and $365 million, respectively, still accrued in current liabilities. The company also recorded 2026 unfavorable adjustments on F-16, C-130, Heavy Lift and Seahawk programs. Separately, Lockheed agreed to acquire Ultra Maritime for $3.45 billion, expected to close in the fourth quarter, and recognized a $64 million obligation after agreeing to guarantee up to $500 million of ULA borrowings.
