Earnings
Lockheed Martin's backlog swells to a record $292 billion as it lifts its 2026 cash outlook by $800 million
Third-quarter sales rose 11% to $20.7 billion and the defense contractor raised its guidance for a second straight quarter, while warning that F-35 Lot 20 costs now outrun contract funding.
HedgeWeekly News Desk ·
Lockheed Martin reported third-quarter sales of $20.71 billion on Thursday, up 11% from $18.61 billion a year earlier, as all four of its business segments grew. Net earnings rose 14% to $1.85 billion, or $7.97 a diluted share, against $6.95 a year ago. Missiles and Fire Control led the gains, with sales up 24% to $4.50 billion, while Aeronautics, home of the F-35, grew 13% to $8.21 billion.
Total backlog reached a record $291.98 billion at September 27, up from $193.62 billion at the end of 2025. Most of the jump sits in Missiles and Fire Control, whose backlog rose to $142.52 billion from $46.65 billion, including $52.5 billion tied to the multi-year award for PAC-3 MSE interceptors.
The company raised its 2026 outlook for the second quarter running. It now expects free cash flow of about $7.8 billion to $8.0 billion, up from $7.0 billion to $7.2 billion in July, and diluted EPS of about $30.35 to $30.75, against $29.95 to $30.65 before. Quarterly free cash flow nonetheless fell to $3.0 billion from $3.35 billion, and Lockheed booked $80 million of unfavorable profit adjustments on the F-16 and C-130 programs.
For investors, the key watch item is the F-35. Lockheed said advance acquisition costs on Lot 20 began exceeding the contract authorization and funding in the third quarter, and that results and cash flow would be hurt without more funding while it negotiates Lots 20 to 22. Capital return is also tilted toward dividends: Lockheed bought back no shares in the first nine months, against $2.25 billion a year earlier, and lifted its quarterly dividend by $0.15 to $3.60.