Lockheed Raises Outlook as Sales Growth Accelerates
Backlog reached a record $230.416 billion after $65 billion of quarterly orders.
Lockheed Martin (LMT), the defense contractor, reported an 11% increase in second-quarter sales to $20.063 billion as production ramps lifted results across its businesses.
The quarter marked an acceleration from essentially flat year-over-year growth in the first quarter. Sales rose about 11% sequentially, while business-segment operating margin recovered to 10.8% from 3.1% a year earlier, when major program losses weighed on results.
Net earnings increased to $1.836 billion, or $7.94 a share, from $1.488 billion, or $6.44 a share, in the first quarter. A year earlier, Lockheed earned $342 million, or $1.46 a share, after recording $1.6 billion of program losses and $169 million of other charges.
Missiles and Fire Control led the advance, with sales rising 19% to $4.101 billion as PAC-3, THAAD and PrSM production increased. The segment's operating profit rose 24% to $594 million, and its margin widened to 14.5%. Aeronautics sales rose 9% to $8.112 billion, helped by additional F-35 production volume, and its operating margin recovered to 9.4% from negative 1.3%.
Rotary and Mission Systems sales increased 9% to $4.354 billion, though new unfavorable profit adjustments on the Heavy Lift and Seahawk programs totaled $115 million. Space sales rose 6% to $3.496 billion, while operating profit was nearly flat and margin narrowed to 10.6% from 10.9%.
Cash from operations rebounded to $3.235 billion from $220 million in the first quarter, and free cash flow swung to positive $2.917 billion from negative $291 million. The improvement was due to the timing of customer receipts and lower tax payments.
Lockheed now expects 2026 sales of about $79.75 billion to $81.75 billion, lifting the midpoint by $2.0 billion, and diluted earnings of about $29.95 to $30.65 a share. It also raised its free-cash-flow outlook to about $7.0 billion to $7.2 billion as planned capital expenditures declined.
The order book expanded about 19% from year-end after Lockheed received a new $35 billion multiyear THAAD interceptor contract. Missiles and Fire Control accounted for the increase, with its backlog climbing to $87.882 billion from $46.650 billion, positioning missile production as the central driver of the company's raised outlook.