Lockheed Martin Corporation (LMT) Earnings & Analysis

Latest quarter

Lockheed Martin reported Q3 FY2026 revenue of $20.7 billion, above the $20.4 billion consensus and up from $18.6 billion a year earlier. Adjusted earnings per share of $7.97 also exceeded the $7.49 consensus; diluted earnings per share rose from $6.95 a year earlier.

The company’s filing attributed higher product sales to production ramps in Missiles and Fire Control and higher F-35 and C-130 production volumes in Aeronautics. Missiles and Fire Control sales rose $877 million, or 24%, while Aeronautics sales increased $958 million, or 13%, according to the filing. The company also reported sales growth at Rotary and Mission Systems, helped by radar programs, and at Space, helped by strategic and missile-defense programs.

Operating margin fell to 11.8% from 12.3%, while gross margin was 11.8%, compared with 12.0% a year earlier. Lockheed Martin reported free cash flow of $3.0 billion, down from $3.3 billion; CFO Evan Scott attributed the quarter’s cash generation primarily to improved working capital from customer receipts.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Evan Scott said Lockheed Martin ended the quarter with $292 billion in backlog and identified the seven-year PAC-3 contract as a contributor. He said that contract has a total potential value of up to $58.6 billion, while awards across the portfolio included C-130J aircraft and missile programs. CEO Jim Taiclet said the F-35 agreement established a path to 850 U.S. aircraft over a 10-year span, with allied sales adding to production.

Taiclet said Lockheed Martin is adding 2 million square feet of facilities across eight sites over the next three years to support munitions production. He said the company is also hiring and training more than 3,000 people across Missiles and Fire Control this year. Suppliers need to expand alongside Lockheed Martin, he said, citing a $4.7 billion PAC-3 propulsion contract placed during the quarter and a $14.7 billion contract awarded after it closed to triple seeker production.

In response to questions about cash flow and contract terms, Scott said customers are helping keep cash flow neutral during the investment ramp, with product deliveries generating cash once production increases. He said final profit terms and schedules remain to be negotiated, adding that schedules are fluid as the company and government invest in capacity.

Taiclet said the framework agreements use an annual inflation-linked price escalator and are intended to let suppliers retain profitability gains from efficiency investments. He said Lockheed Martin’s goal is for margins and financial performance under the munitions agreements to be at or above historical rates. Taiclet also described provisions to recover investments if future contract volumes or duration are reduced.

On funding, Taiclet said continuing resolutions can affect the timing of work and new starts. Scott said the fourth quarter includes an extra week compared with the prior-year period and that the outlook will incorporate Ultra Maritime once the acquisition closes.

Guidance

Lockheed Martin raised its FY2026 sales outlook to $80.0 billion to $82.0 billion. The company now expects diluted earnings per share of $30.35 to $30.75, compared with $29.95 to $30.65 previously.

Scott also raised the segment operating profit outlook to $8.575 billion to $8.675 billion. The company expects free cash flow of $7.8 billion to $8.0 billion, up from its previous $6.5 billion to $6.8 billion range.