Lockheed Martin reported third-quarter 2026 sales of $20.711 billion on 22 October, up 11 percent from $18.609 billion, and net earnings of $1.845 billion, or $7.97 a share, up 14 percent from $6.95. Backlog reached a record $292.0 billion, up 27 percent since the second quarter, and includes $52.5 billion for a multi-year award to produce PAC-3 Missile Segment Enhancement interceptors. The company raised its 2026 outlook for the second consecutive quarter, guiding to sales of about $80.0 billion to $82.0 billion, earnings per share of about $30.35 to $30.75, and free cash flow of about $7.8 billion to $8.0 billion.
The case for the quarter is that growth is broad and the outlook is rising. All four business segments grew sales, and business segment operating profit rose to $2.229 billion from $2.029 billion. Consolidated operating profit was $2.443 billion, up from $2.280 billion. The new guidance compares with $79.75 billion to $81.75 billion in sales, $29.95 to $30.65 in earnings per share and $7.0 billion to $7.2 billion in free cash flow in the July update, so the free cash flow outlook rose by about $800 million at the midpoint. Nine-month sales were $58.795 billion, against $54.727 billion a year earlier, and nine-month net earnings were $5.169 billion, up from $3.673 billion. Lockheed raised its dividend for the 24th year in a row.
The counter-argument is that the quarter’s cash generation fell and one major program is unresolved. Cash from operations was $3.4 billion, down from $3.7 billion, and free cash flow was $3.0 billion, down from $3.3 billion. The company is still negotiating production contracts with the U.S. government for F-35 lots 20 and higher, and said its costs began to exceed the contractual authorization and funding on the Lot 20 advance acquisition contract during the third quarter. Without additional authorization and funding, Lockheed says that its results of operations, cash flows and financial condition will be negatively affected in future periods. The record backlog also depends heavily on one award, since the PAC-3 contract accounts for $52.5 billion of the $292.0 billion, about 18 percent.
The report matters because Lockheed is one of the largest suppliers of missiles, aircraft and defense systems to the United States and its allies, and its backlog gives it visibility on future sales. Chief Executive Jim Taiclet said that the company is combining proven systems such as Aegis, F-35 and Hellfire with digital technologies, including artificial intelligence and autonomy, and with products from start-ups. Capital expenditures are expected to be $2.1 billion to $2.3 billion for the year, and the company reported independent research and development spending of $599 million for the quarter. Business segment operating profit is now guided to about $8.575 billion to $8.675 billion, from $8.5 billion to $8.7 billion, and cash from operations to about $10.0 billion to $10.2 billion, from $9.2 billion to $9.4 billion.
Lockheed Martin grew sales, profit and backlog and raised its outlook. The unresolved F-35 funding is the main risk to the cash flow in the guidance.