Lockheed Martin Corporation

Lockheed Martin reported Q2 sales of $20.1 billion, up $1.9 billion or 11% year over year; segment operating margin was 10.8%; profit was $2.2 billion; and EPS was $7.94. Free cash flow was $2.9 billion versus negative $150 million in the prior-year quarter. Backlog reached a record $230 billion, up about $64 billion year over year, and quarterly book-to-bill was 3.2:1. Full-year 2026 guidance was raised to sales of $79.75 billion to $81.75 billion, segment operating profit of $8.5 billion to $8.7 billion, free cash flow of $7 billion to $7.2 billion, EPS of $29.95 to $30.65, and capex of $2 billion to $2.4 billion. On a segment basis, Aeronautics sales are projected at $31.7 billion to $32.7 billion; MFC at $16.5 billion to $16.9 billion; RMS at $17.7 billion to $18.1 billion; and Space at $13.85 billion to $14.05 billion. Space profit guidance was lowered to $1.34 billion to $1.38 billion due to reduced ULA equity earnings tied to the Vulcan anomaly investigation.

Jim Taiclet said the quarter validated Lockheed Martin’s strategy of investing ahead of demand, expanding manufacturing capacity, and building more resilient supply chains and coproduction footprints. He framed the company’s direction as a shift toward being the “clear leader” in defense technologies, not just the largest prime, and repeatedly stressed speed, flexibility, and commercial-style long-term agreements. His tone was confident and assertive, with emphasis on sustained growth, deterrence, and readiness for changing threats.

Evan Scott emphasized that the quarter was strong both operationally and financially, led by record backlog, 11% sales growth, $2.9 billion of free cash flow, and EPS of $7.94. He said the sales and profit raise is broad-based, with second-half 2026 growth expected to accelerate and every segment growing faster in the back half. He also highlighted $876 million of Q2 investment in capital assets and R&D, the reduced capex outlook of $2 billion to $2.4 billion due to munitions buildout efficiencies, and the expectation that improved working capital and IRS guidance will support free cash flow of $7 billion to $7.2 billion.

Analysts focused on how quickly Lockheed can scale new products like PAC-3 ACE, Sanctum, and Morpheus, whether the company is willing to invest capex before formal awards, and whether the current commercial-acquisition push is durable. Management said it is already investing ahead of orders based on mission roadmaps and target-weapons matching, and that the new framework agreements let it ramp production faster while protecting upfront investment. On program risk, Taiclet said prior classified-program adjustments reset baselines and that the portfolio now shows more scale and resilience, citing resumed F-16 deliveries and broad munitions growth. On margins, management said new munitions frameworks should generally track historic MFC margins over time, with some near-term dilution but potential for better-than-historic margins if cost takeout is achieved.