Lockheed Martin Corp. (LMT)

Lockheed Martin reported third-quarter 2026 sales of $20.7 billion on 22 October, up 11 percent from $18.6 billion, and net earnings of $1.8 billion against $1.6 billion 1. Its backlog, the work ordered but not yet delivered, grew 27 percent in the quarter to a record $292.0 billion 1. Most of the jump was a $52.5 billion multi-year award to build PAC-3 MSE interceptors for the Patriot air-defense system 1.

Each of the four business segments grew, and missiles led 1. Missiles and Fire Control sales rose 24 percent to $4.5 billion on faster production of PAC-3 and THAAD interceptors and of GMLRS and PrSM missiles 1. Reuters reported that PAC-3 stockpiles were heavily used by US and allied forces in the Iran war 11.

The open question is the F-35, its largest program 3. Costs on the advance contract for F-35 Lot 20 began to exceed the authorization and funding in place during the quarter, while talks on Lots 20 and higher continue 1. The same day, the company and the Department of War announced a 10-year framework for 850 US F-35s that still needs multiyear authority and funding before a contract 12.

Lockheed Martin was formed in 1995 by combining Lockheed Corporation and Martin Marietta 3. Its modern shape came from two moves: it bought Sikorsky, the helicopter maker, whose backlog it counted from 2015, and in August 2016 it split off its government IT business, IS&GS, into Leidos 8. That deal brought a net gain of about $1.3 billion and a special cash payment of $1.80 billion 8.

From 2016 to 2019, sales rose from $47.3 billion to $59.8 billion, driven mostly by more F-35 production, more THAAD interceptors and more tactical missiles 78. The exception was 2017 profit: net earnings fell to $1,963 million because the Tax Cuts and Jobs Act forced a one-time $2.0 billion write-down of its deferred tax assets 8.

In 2020 sales grew to $65.4 billion despite the pandemic, as F-35 production, PAC-3 and THAAD interceptors and government satellites all rose 7. Supplier delays cut the F-35 production rate and pushed 18 deliveries out of the year 7. In December 2020 it agreed to buy Aerojet Rocketdyne for its rocket propulsion, but the deal was terminated in 2022 amid regulators' scrutiny of mergers 76.

Sales then stalled, at $67.0 billion in 2021 and $66.0 billion in 2022 6. The 2022 annual report puts the dip down to fewer Black Hawk helicopters, the UK's renationalization of AWE on 30 June 2021, which took work out of Space, and lower THAAD volume 6.

Then the F-35 hit a software snag: none were delivered in the first half of 2024 while the Technology Refresh 3 upgrade, TR-3, matured, and deliveries resumed in the third quarter 5. Sales still rose to $71.0 billion in 2024 on GMLRS, HIMARS, JASSM and LRASM missiles, radars and the CH-53K helicopter 5. Net earnings fell to $5,336 million from $6,920 million, mainly after losses of $1.4 billion on a classified missile program and $555 million on a classified aircraft program 53.

In 2025 sales reached $75.0 billion, but more reach-forward losses, the whole expected loss on a contract booked as soon as it shows, cut profit 3. They were $950 million on the classified aircraft program, $570 million on Canada's maritime helicopter program and $95 million on a Turkish utility helicopter program 3. Net earnings were $5,017 million, also after a $479 million pension settlement charge 31.

Deliveries recovered: the F-35s delivered since the program began went from 1,102 at the end of 2024 to 1,293 at the end of 2025, or 191 in the year (computed) 53. The backlog grew to $193.6 billion from $176.0 billion 3.

Aeronautics and the F-35

Aeronautics builds military aircraft: the F-35 Lightning II stealth fighter, the C-130 Hercules airlifter, the F-16 Fighting Falcon and the F-22 Raptor, plus classified work and the future designs of its Skunk Works 3. It sold $30.3 billion in 2025, 36 percent of it to customers abroad 3. The F-35 alone was 27 percent of company sales and 67 percent of Aeronautics' 3.

The company has delivered 1,387 production F-35s, 94 of them in the first nine months of 2026 against 143 a year earlier, and holds 274 in backlog 21. The US government's stated goal is 2,456 aircraft for its Air Force, Marine Corps and Navy 3. Aeronautics' third-quarter sales grew 13 percent, $710 million of the gain from F-35 production and sustainment 1.

The GAO, the auditor that reports to Congress, published an F-35 review in June 2026 17. It found the fleet's mission capable rate, the share of time a jet can fly at least one mission, fell from 67 percent in fiscal 2021 to 44 percent in fiscal 2025 17. It also found incentive fees paid for performance below the services' requirements 17.

Missiles and Fire Control

Missiles and Fire Control makes interceptors that shoot down incoming missiles, PAC-3 for the Patriot system and THAAD, and strike weapons such as MLRS rockets fired from HIMARS launchers, PrSM, JASSM, LRASM and Hellfire 3. It also builds the Javelin anti-tank weapon in a joint venture with RTX 3. Sales were $14.45 billion in 2025, 29 percent from abroad, and seventeen nations have chosen PAC-3 3.

Two multi-year contracts in 2026 set its pace: up to $53.86 billion over seven years for PAC-3 MSE, bringing that contract to $58.62 billion, and $35 billion for THAAD interceptors 13. The company says it aims to triple PAC-3 MSE capacity by the end of 2030, with final assembly in Camden, Arkansas 13. In the third quarter of 2026 the segment earned a 14.0 percent operating margin, the highest of the four 1.

Rotary and Mission Systems

Rotary and Mission Systems builds Sikorsky helicopters, the Black Hawk, Seahawk and CH-53K King Stallion, and the Aegis combat system that runs missile defense on warships, plus radars, ships and training systems 3. It sold $17.3 billion in 2025, 34 percent abroad 3. Its third-quarter 2026 sales rose 3 percent, on radar programs 1.

Space

Space builds the Trident II D5 submarine-launched ballistic missile, Next Gen OPIR missile-warning satellites, GPS III satellites and NASA's Orion crew capsule 3. It also develops the Next Generation Interceptor for homeland missile defense and small satellites for the Space Development Agency 3. Sales were $13.0 billion in 2025, and its sales abroad were not material that year 3.

Customers and the order book

The US government provided 70 percent of the $58.8 billion sold in the first nine months of 2026, including 61 percent from the Department of War 2. The other 30 percent came from customers abroad, mostly through the government's Foreign Military Sales program, which carried 77 percent of foreign sales in 2025 23. The company expects to turn about 23 percent of its backlog into sales over the next 12 months 2.

Plants and people

At the end of 2025 the company had about 123,000 employees, about 72,000 of them engineers, scientists and IT staff, with 93 percent in the US and 19 percent under union agreements 3. It worked from 333 locations 3. The main sites include Fort Worth, Texas, and Marietta, Georgia, for aircraft, Camden, Arkansas, and Troy, Alabama, for missiles, Stratford, Connecticut, for helicopters and Denver and Sunnyvale for space 3.

James Taiclet, a former Air Force pilot and a director since 2018, is chairman, president and chief executive 9. Evan Scott became chief financial officer in April 2025, and Frank St. John is chief operating officer 9.

Rivals

The annual report names Boeing, General Dynamics, L3Harris Technologies, Northrop Grumman and RTX as its main competitors, and says it often teams with them on bids 3. Bid protests, a rival's formal challenge to a government award, are a standing feature of the market 3. Reuters reported that RTX and Northrop Grumman also raised their forecasts in October on the same demand for munitions and air defense 11.

Problems on file

Without more authorization and funding for the F-35, the company says its results, cash flows and financial condition will be hurt 1. A shareholder class action filed in July 2025 claims misstatements about classified programs and the F-35 before the company announced losses on them 2.

Several programs still cost more than estimated 2. In the first nine months of 2026 it took unfavorable profit adjustments of $175 million on the C-130, $170 million on the F-16, $125 million on Heavy Lift and $95 million on the Seahawk 2. United Launch Alliance's Vulcan rocket had performance problems in early 2026, and the company has guaranteed up to $750 million of its borrowings 2.

The umbrella, in words

Beyond its four segments, the subsidiaries the annual report lists by name include Sikorsky Aircraft Corporation, Lockheed Martin UK, Lockheed Martin Canada, Lockheed Martin Australia and Zeta Associates 4. The list also names Polskie Zaklady Lotnicze, formed in Poland, where Rotary and Mission Systems runs a site in Mielec 43. The exhibit says smaller subsidiaries are left out 4.

It owns what it bought: Terran Orbital, a satellite maker, for $314 million in October 2024, and Amentum's Rapid Solutions, space and airborne surveillance work, for $360 million in 2025 53. In July 2026 it agreed to buy Ultra Maritime, an undersea warfare company, from Advent for $3.45 billion, paid from cash on hand 216.

It owns 50 percent of United Launch Alliance, with Boeing holding the rest, and makes the Javelin through a joint venture with RTX 23. Its floor space came to 66.5 million square feet at the end of 2025: 35.4 million owned, 14.1 million leased and 17.0 million in government-owned plants 3.

No single owner controls the votes: the largest holders in the 2026 proxy statement were State Street with 14.9 percent, Vanguard with 8.9 percent and BlackRock with 7.4 percent, as each reported on Schedule 13G 9. In a Schedule 13G for 31 March 2026, Vanguard Capital Management reported 6.99 percent of the common stock 10.

For 2026 the company now expects sales of about $80 billion to $82 billion, up from $79.75 billion to $81.75 billion in July 1. It expects free cash flow, cash from operations less capital spending, of about $7.8 billion to $8.0 billion 1. Its fourth quarter runs 14 weeks against 13 a year earlier, by its own calendar 1.

The F-35 framework covers 850 US jets over 10 years plus international orders across Lots 21 to 30, with production held at 156 aircraft a year in total 12. Contract terms, pricing and schedules are set only if multiyear authority and appropriations are granted, Defence Industry Europe reported 12. Reuters reported that the agreement covers at least 850 US jets and $7 billion in industrial-base investments 11.

The Administration's fiscal 2027 request seeks a $1.5 trillion defense budget, naming munitions framework deals, Golden Dome missile defense and more F-35 purchases 2. Congress has so far passed only a continuing resolution, which keeps 2026 funding levels through 11 December 2026 2.

The company says it is investing $8 billion to $9 billion through 2030 to modernize more than 20 US facilities for munitions 13. In October it announced a $300 million expansion at Grand Prairie, Texas, and plans for 6,000 jobs nationwide, 2,000 of them in Texas 18. An automated machining cell from Hadrian is due to start there in early 2027 18.

The company expects the Ultra Maritime purchase to close in the fourth quarter of 2026 and to report it within Rotary and Mission Systems 2. It and Boeing expect to give United Launch Alliance more financial support, and the company says it could book impairment and operating losses if Vulcan does not perform as ULA assumes 2.

Past

Revenue grew from $47 billion in fiscal 2016 to $75 billion in fiscal 2025, up 5.3% a year, rising in 8 of 9 years The deepest fall was 2% from fiscal 2021 to fiscal 2022 Net income was positive in all 10 filed years Over the three fiscal years to 2025, the diluted share count shrank about 4.1% a year, and dividends and buybacks returned about 94% of operating cash flow Officers and directors filed 24 sales and 0 purchases of their own stock on the open market in the year to 2026-10-01 The grade's past tense reads 5.7 of 10 12

Present

For the fiscal year ended 2025-12-31, Lockheed Martin reported revenue of $75 billion and a profit of $5.0 billion Return on equity was 75 cents of profit for every dollar of shareholders' money Leverage was 89 cents owed per dollar of assets, and the share count shrank 2.4% over the year Among seven graded names in its industry, revenue of $75 billion ranks in the top 7% by size and a net margin of 6.7% ranks in the top 7% The chief executive is James D Taiclet Jr, filing under that title since 2020-07-28, and the 20 officers and directors filing in the last fifteen months have been on the record a median of 5.2 years The grade's present tense reads 6.7 of 10 21

Future

A quarterly report for the quarter ending 2026-09-30 is due by 2026-11-09 under the SEC's rules An annual report for the fiscal year ending 2026-12-31 is due by 2027-03-01 under the SEC's rules Cash of $4.1 billion against debt of $21 billion leaves negative 27.4% of assets as net cash, in the bottom 7% of its family Cash from operations less capital spending is 9.2% of revenue, in the top 7% Revenue grew 4.4% a year over the last three filed years against 5.3% over all ten, slowing Research spending grew 5.6% a year, in the top 50% The grade's future tense reads 3.6 of 10 412

How the company operates

Product and service lines accounted for 84% and 17% of revenue in fiscal 2025 The four business segments were Aeronautics at $30 billion, Space at $13 billion, Rotary and Mission Systems at $17 billion, and Missiles and Fire Control at $14 billion By geography, the United States accounted for 72% of revenue, Europe 12%, Asia Pacific 10%, the Middle East 4%, and other regions 3% Both product and service lines grew against the prior year 231

New moves

On 2026-08-28, a major agreement was signed On 2025-12-09, a major agreement was signed On 2025-08-29, a major agreement was signed On 2026-05-13, shareholders voted on proposals On 2026-10-01, Boeing beat Northrop for the Navy's next carrier fighter jet on a Pentagon contract valued at more than $20 billion; Lockheed Martin is adjacent to the event as the defense industry landscape shifts 45