Lockheed Martin Corporation

What they do

Lockheed Martin designs, develops, manufactures, and sustains advanced military aircraft, missiles, fire control systems, rotary and mission systems, and space systems. Its principal customers are U.S. Government agencies and allied nations, with a focus on defense, space, intelligence, and cybersecurity.

Revenue drivers

• Aeronautics (F-35, C-130, F-16, F-22) — Aeronautics generates 27% of total consolidated sales from the F-35 program alone, which also accounts for 67% of Aeronautics' sales; includes combat, air mobility, and unmanned aircraft.
• Missiles and Fire Control (MFC) — MFC produces missiles, fire control systems, and munitions, including the THAAD interceptor program, which contributed to a record backlog through a $35 billion multi-year contract.
• Rotary and Mission Systems (RMS) — RMS provides rotary-wing aircraft, mission systems, and integrated defense solutions, serving U.S. and international customers.
• Space — Space focuses on satellites, space exploration, and strategic missile programs, supporting national security and civil space objectives.

Recent performance

For Q2 2026, sales rose 11% year-over-year to $20.1 billion, net earnings were $1.8 billion ($7.94 per share), and cash from operations was $3.2 billion, with free cash flow of $2.9 billion. Six-month sales were $38.1 billion, with 70% from U.S. Government customers. Segment operating profit for Q2 was $2.2 billion, versus $571 million a year earlier, and consolidated operating profit was $2.5 billion. Record backlog reached $230 billion, driven by $65 billion in new orders.

Strategy

Lockheed Martin is executing its '21st Century Security' strategy, focusing on integration, partnerships, and operational excellence. The company is expanding production capacity, investing in AI, autonomy, and open-architecture systems, and signing agreements with General Motors Defense and Rheinmetall to strengthen global manufacturing. It is also modernizing munitions production, including a $35 billion THAAD contract with the Missile Defense Agency.

Risks

• U.S. Government dependence — Lockheed derives 72% of sales from the U.S. Government, making it highly sensitive to budget cuts, continuing resolutions, or shutdowns.
• Supply chain and inflation — Supplier shortages, performance issues, tariffs, and inflation can increase costs, particularly on fixed-price contracts, impacting margins and cash flows.
• Tariff and trade policy risk — Imported materials are subject to tariffs and trade restrictions, which may raise costs or disrupt supply, although $140 million in refunds were received in H1 2026.
• Program performance risk — Complex programs like F-35 face review of performance, schedule, and cost, and could incur losses if issues arise, as seen with $1.6 billion in program losses in Q2 2025.

Outlook

Management raised full-year 2026 guidance, expecting sales growth of approximately 8%, segment operating profit up 28%, and free cash flow over $7 billion. The company sees regional conflicts driving increased demand and is working to expand capacity and replenish depleted stockpiles. Despite supply chain and tariff challenges, management does not expect existing tariffs to have a material long-term impact on results.