stockrowWhat it does
Lockheed Martin is a global aerospace and defense technology company serving U.S. and international government customers in defense, space, intelligence, homeland security, information technology and cybersecurity. Its four segments are Aeronautics, Missiles and Fire Control (MFC), Rotary and Mission Systems (RMS), and Space. It was founded in 1995, is headquartered in Bethesda, and is led by Chairman, President and Chief Executive Officer James D. Taiclet. [record; leadership]
Aeronautics designs, builds, upgrades and supports military aircraft, including the F-35 fighter, C-130 airlifter, F-16 and F-22, as well as unmanned aircraft and classified programs. MFC provides air- and missile-defense systems, tactical missiles, precision-strike weapons, sensors, fire-control systems, logistics and mission-support services. Its programs include PAC-3, THAAD, HIMARS-related missiles, JASSM, LRASM, Hellfire, JAGM and Javelin. [item1]
RMS supplies military and commercial helicopters, naval combat systems, radars, command-and-control systems, cyber solutions, training and simulation, and ship-support services. Its Sikorsky business includes Black Hawk, Seahawk and CH-53K helicopters. Space develops satellites, strategic and defensive systems, space transportation systems, missile-warning capabilities and systems for national-security missions. [item1]
The company is building Vectis autonomous aircraft with its own investment and plans to build five aircraft. It also combines platforms, sensors, missiles, data links and command-and-control systems into broader mission systems for land, sea, air, space and cyber operations. [call_prepared]
How it makes money
Lockheed Martin earns sales primarily under long-term government contracts to develop, produce, upgrade, sustain and support defense and space systems. Its contracts are mainly fixed-price or cost-reimbursable. Under cost-reimbursable work, the customer generally pays allowable costs plus a fee up to a funding ceiling. Under firm-fixed-price work, Lockheed Martin bears cost overruns; under fixed-price incentive work, the customer and company share specified cost underruns and overruns up to a ceiling. [item1a]
Aeronautics earns revenue from F-35 development, production and sustainment, as well as other military-aircraft programs. The F-35 generated 27% of consolidated sales in 2025 and includes development, aircraft production, logistics and training support. MFC sells missile-defense and strike systems, related munitions, sensors and support. RMS generates revenue from helicopter production and support, naval systems, radars, command-and-control, cyber, training and simulation. Space earns revenue from satellites, strategic systems, missile defense, hypersonics and space transportation. [item1]
For many multi-year contracts, revenue is recognized as work progresses, generally using a cost-to-cost measure. Profit can change when estimated costs, contract value, technical requirements, schedules or expected incentive fees change. Supply-chain disruption, technical problems and schedule delays can reduce profitability, particularly on fixed-price programs. [item7; item1a]
Latest totals: 2025 sales were $75.0 billion; third-quarter 2026 sales were $20.7 billion and segment operating profit was $2.2 billion. [item7; call_prepared]
Sustainment, spare parts, upgrades, training, logistics and fleet readiness can continue after an initial platform delivery. The company also receives customer-funded research and development work while conducting independent research and development using its own funds. [item1; call_prepared]
Customers and how it sells
Lockheed Martin’s principal customers are agencies of the U.S. Government and allied governments. It sells directly to foreign government authorities and through the U.S. Government’s foreign military sales channel. Its government work includes contracts with U.S. military branches, NASA, the Missile Defense Agency, the U.S. Space Force and other government entities, alongside classified programs that cannot be described publicly. [item1]
In 2025, the U.S. Government accounted for 72% of sales, including 63% from the Department of War, while international customers accounted for 28%. U.S. Government funding is often appropriated annually even where contract performance extends over years, and contracts can be only partly funded at inception. [item7; item1a]
The F-35 has commitments from seven international partner countries and 12 foreign military sales customers. Its existing global fleet exceeds 1,375 aircraft. [item1; fact_6aa01ab7]
The company booked $4.4 billion in C-130J contracts for 34 production aircraft serving U.S. and international customers. It also received an $800 million contract for the next tranche of Australia’s AIR 6500 joint air battle-management system, and a $439 million contract to produce Army Tactical Missile Systems for Taiwan’s HIMARS launchers. [call_prepared; fact_1b49f8a8; fact_6eb10c93; fact_3401cb34]
International competitions are affected by export restrictions, technology-transfer rules, market access, local industrial-cooperation requirements and the purchasing government’s relationship with the United States. [item1]
Suppliers and costs
Lockheed Martin relies on suppliers for materials, major components, products and services, often as the prime contractor on its customer contracts. Important inputs include rare earth minerals, aluminum, titanium, specialty steel, carbon fiber and advanced microelectronics such as semiconductors. A significant number of components are single- or sole-sourced, while identifying and qualifying alternatives can take time and add cost. [item1; item1a]
Supply-chain shortages, supplier disputes, regulatory restrictions, inflation and extended lead times have caused parts shortages, delivery delays and cost escalation. The company expects these conditions to continue in 2026. It is also working to transition rare-earth-mineral and magnet supply chains to compliant sources, but availability and mining-level compliance remain challenges. [item1]
The company placed a $4.7 billion PAC-3 propulsion supply contract with L3Harris, awarded Boeing a $14.7 billion contract to triple PAC-3 seeker production, and awarded Northrop Grumman a $1.6 billion contract for propulsion and other missile components. Nearly 750 suppliers across 42 states support THAAD. [call_prepared; fact_1c317bf2; fact_ea808129; fact_6ed6c83f]
Labor, materials, subcontractor work, overhead, manufacturing performance and program schedules are significant cost drivers. On fixed-price contracts, higher actual costs reduce margins and can require a provision for the expected loss on the full contract. [item7; item1a]
- Revenue$75.0B
- Cost of revenue−$67.4B
- Other operating costs−−$112.0M
- Operating income$7.7B
Competitive position
Lockheed Martin competes domestically and internationally for government contracts across aerospace and defense. The Boeing Company, General Dynamics, L3Harris Technologies, Northrop Grumman and RTX Corporation are among its primary competitors. It also faces smaller competitors, startups, non-traditional defense contractors and non-U.S. contractors. [item1]
Competition covers military aircraft, missile and air defense, tactical missiles, helicopters, naval systems, radars, command-and-control, cyber, space systems and classified programs. Companies may compete for one contract while serving as a supplier, subcontractor or teaming partner on another. RTX is Lockheed Martin’s joint-venture partner on Javelin. Boeing and Northrop Grumman supply PAC-3-related components, while L3Harris supplies PAC-3 propulsion. [item1; call_prepared]
Customers evaluate technical performance, reliability, safety, cost competitiveness, innovation, program execution, delivery, past performance, customer relationships and global access. Procurement reforms, rapid-acquisition methods and commercial access to space are widening competition in some programs. [item1; item1a]
Our reading: Lockheed Martin’s long-lived installed platforms, sustainment activities and ability to connect aircraft, missiles, sensors, command-and-control and space systems are a meaningful competitive position because customers assess execution, past performance and integrated capability. [item1; call_prepared]
Our reading: Its engineering know-how, classified work and intellectual property are meaningful but limited protections because government-funded intellectual property can be used or authorized for use by others. [item1]
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| The Boeing Company | military aircraft, missile components and defense contracts | High |
| General Dynamics | U.S. and international defense contract competitions | High |
| L3Harris Technologies | defense systems and PAC-3 propulsion supply | High |
| Northrop Grumman | aerospace, defense and missile components | High |
| RTX Corporation | defense systems and missile programs | High |
| Rocket Lab | missile-defense and national-security space work | Medium |
Growth opportunities
The company is expanding munitions production, pursuing multi-year contracts, increasing manufacturing capacity, investing in autonomous systems and integrating systems across its portfolio. Its stated areas of investment include air and missile defense, hypersonics, autonomy, counter-drone systems, strategic missile defense, command-and-control and national-security space. [call_prepared]
It ended the third quarter of 2026 with backlog of $292 billion and a book-to-bill ratio of 4x. The PAC-3 seven-year contract had total potential value of up to $58.6 billion. The company also signed a seven-year THAAD contract, is adding 2 million square feet of facilities across eight sites over three years, and is hiring and training over 3,000 new team members across MFC sites. [call_prepared; fact_7f0e9d0f; fact_51941619]
A multiyear F-35 agreement establishes a path to 850 U.S. aircraft over 10 years, augmented by allied sales, with total production of 156 aircraft a year for 10 years. The company continues to develop autonomous aircraft, including Vectis, and is investing in missile-defense, counter-drone, hypersonic and space systems. [call_prepared; fact_8fda5127; fact_285dd6e0]
The company expects 2026 sales of between $80 billion-$82 billion, segment operating profit of between $8.575 billion and $8.675 billion, cash from operations of between $10 billion and $10.2 billion, and free cash flow of between $7.8 billion-$8 billion. This outlook did not include Ultra Maritime. [call_prepared]
MFC has stated that it expects mid-teens sales CAGRs over the next five years. Aeronautics identifies F-35 sustainment as a pacing item for growth, while RMS identifies helicopter production, radar awards and mission systems, and Space identifies strategic missile defense, Fleet Ballistic Missile and Next Generation Interceptor programs. [call_qa]
- $67.0BFY2021
- $66.0BFY2022
- $67.6BFY2023
- $71.0BFY2024
- $75.0BFY2025
- $80.0BFY2026 guidance
Structural risks
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Government funding and priorities. The U.S. Government provided 72% of 2025 sales. Changes in defense priorities, spending reductions, delayed appropriations, continuing resolutions, shutdowns or debt-ceiling disruptions can delay awards, restrict new starts, reduce orders, delay payments or cancel programs. [item1a]
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F-35 exposure. The F-35 represented 27% of 2025 consolidated sales. Funding reductions, delayed orders, supplier performance, software development, affordability, modernization, testing, production scheduling and sustainment performance could affect results. [item1; item1a]
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Fixed-price execution. Cost overruns on fixed-price development and production contracts can reduce margins or create reach-forward losses. Technical complexity, inaccurate estimates, inflation, delays, workforce constraints and supplier performance can increase costs to complete. [item1a]
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Supplier and material dependency. Supplier failures, shortages of semiconductors and rare earth minerals, sole-source components, regulatory sourcing restrictions and non-compliant parts can delay deliveries, increase costs, require remediation or impair contract performance. [item1; item1a]
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Competition and procurement change. Competitive bidding, new entrants, non-traditional contractors, acquisitions by competitors and procurement practices that shift more risk to contractors can pressure pricing, margins and future awards. [item1; item1a]
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Regulation and contract remedies. Government-contract rules impose cost-accounting, cybersecurity, security-control, export-control and disclosure obligations. The U.S. Government can terminate contracts for convenience or default, and audits or investigations can affect prices, payments, penalties or eligibility to bid. [item1; item1a]
Bottom line
Our reading
Our reading: Lockheed Martin is a government-defense contractor whose revenue is built around long-duration aircraft, missile, helicopter, naval, command-and-control and space programs, plus sustainment and modernization work after delivery. [item1; item7]
Our reading: Its current opportunity is shaped by multi-year munitions agreements, F-35 production and sustainment, and investments in capacity and suppliers; its exposure remains concentrated in government budgets, complex fixed-price execution and multi-tier supply chains. [item1a; call_prepared]
Our reading: The $292 billion third-quarter backlog provides contracted work visibility, but the pace and profitability of conversion depend on funding, contract terms, deliveries and cost control. [call_prepared; item7]