Lockheed Martin Corporation (NYSE:LMT) reported first-quarter 2026 results on Thursday. Shares traded lower after the release, as the company missed earnings and revenue expectations.

Earnings Miss And Cash Flow Pressure

  • Sales were $18.021 billion, below the $18.244 billion estimate, and diluted EPS of $6.44 missed the $6.71 estimate. Sales were flat year over year, while EPS declined from $7.28 in the prior-year period.
  • Net earnings were $1.5 billion, compared to $1.7 billion a year earlier.
  • Operating profit was $2.06 billion, down from $2.37 billion, while business segment operating profit declined 13% to $1.82 billion. Operating margin fell to 11.4% from 13.2%.
  • Cash from operations totaled $220 million, compared to $1.4 billion in the prior year. Free cash flow was negative $(291) million, versus $955 million last year, mainly due to higher working capital from billing timing.
  • Capital expenditures were $511 million. The company also spent $458 million on independent R&D, paid $816 million in dividends, and repaid $1.0 billion in debt.

Mixed Segment Performance

Aeronautics sales fell 1% to $6.95 billion, while profit was down 14% due to weaker volumes and adjustments.

Missiles and Fire Control sales rose 8% to $3.65 billion, with profit up 8% on production ramp-ups.

Rotary and Mission Systems sales dropped 8% to $3.99 billion, with profit down 19% on lower volumes.

Space sales increased 7% to $3.43 billion, but profit fell 26% due to lower adjustments.

Total backlog stood at $186.4 billion, down from $193.6 billion at year-end 2025. Aircraft deliveries included 32 F-35 jets, down from 47 a year earlier, and 19 government helicopters, up from 9.

Outlook

The company reaffirmed its full-year 2026 outlook, with GAAP EPS guidance of $29.35 to $30.25 compared with the $29.88 estimate, and sales guidance of $77.5 billion to $80.0 billion versus the $79.176 billion estimate.

The company also cited potential risks from factors such as government funding uncertainty, inflation, supply chain pressures, and trade-related restrictions, including tariffs.

“Our superior fifth generation fighter jets, the F-35 and F-22, continue to operate with great effectiveness in contested and difficult missions. Additionally, our layered missile defense architecture, including phased array radars, Aegis integrated command and control system, and the THAAD and advanced Patriot Missile interceptors, protected both military assets and civilians,” said Lockheed CEO Jim Taiclet.

Conference Call Highlights

Lockheed Martin said on its first-quarter 2026 earnings call that it remains confident in its full-year guidance. The company cited strong demand, munitions expansion, and a $1.5 billion deal to supply 12 F-16 fighters to Peru, with potential for 12 more, expanding its regional presence.

The company said a shorter fiscal period and material timing impacted the quarter. It expects sales to rise through the rest of 2026.

Lockheed highlighted key awards, including a $4.8 billion PAC-3 production contract, a $700 million F-35 materials deal, an $890 million missile program award, and a $365 million Aegis contract.

It is expanding more than 20 facilities to support higher interceptor production over the next three to four years.

The company also cited progress across platforms, including PRISM testing, autonomous Black Hawk capabilities, Orion's role in NASA's Artemis II mission, and increased AI investment.

Price Action: LMT shares were trading 3.93% lower at $533.59 on Thursday at the time of publication.

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