01—Abstract
Summary
Summary of the 10-Q filed October 21, 2025. Cited figures are marked; the original filing is the authoritative source.
Lockheed Martin Corporation (LMT) reported its third-quarter 2025 financial results, showcasing a 9% increase in total sales to $18.6 billiona compared to the prior year, driven by growth across most segments, particularly Aeronautics and Missiles and Fire Control (MFC).
Despite increased sales, net earnings for the quarter remained relatively flat at $1.62 billionb, leading to a slight decrease in diluted earnings per share to $6.95 from $6.80 in the prior year's quarter. This was largely influenced by significant program losses recognized in the Aeronautics and Rotary and Mission Systems (RMS) segments, impacting profitability.
The company continues to manage its strong backlog of $179.1 billionc, with approximately 36% expected to convert to revenue in the next 12 months. Lockheed Martin also demonstrated its commitment to returning capital to shareholders through consistent dividend payments and share repurchases, with an increased authorization for future buybacks.
02—Key points
Key Highlights
- Total sales increased by 9% year-over-year to $18.6 billion, driven by growth in Aeronautics and MFC segments.
- Net earnings remained stable at $1.62 billion for the quarter, while diluted EPS slightly decreased to $6.95.
- Significant program losses were recognized in Aeronautics ($950 million) and RMS ($570 million on CMHP, $95 million on TUHP) during the quarter, impacting overall profitability.
- The company's backlog remains robust at $179.1 billion, providing strong visibility for future revenue.
- Lockheed Martin returned $2.3 billion to shareholders through dividends and share repurchases in the nine months ended September 28, 2025.
- The company's effective income tax rate increased to 16.5% due to the Tax Act, impacting net earnings.
- Cash and cash equivalents increased to $3.5 billion, and free cash flow for the nine months was $4.15 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2025, Lockheed Martin kept $0.09.
- Revenue$18.61B100.0%
- Cost of revenue−$16.37B88.0%
- Gross profit$2.24B12.0%
- Operating costs$40.0M0.2%
- Operating income$2.28B12.3%
- Interest, other & tax−$661.0M3.6%
- Net income$1.62B8.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2025filed October 21, 2025Financial Statements
Q3 FY2025 against Q3 FY2024
| Line item | Q3 FY2025Q3 FY2024 | Change |
|---|---|---|
| Revenue | $18.61B$17.10B | +8.8% |
| Cost of Revenue | $16.37B$14.99B | +9.2% |
| Gross Profit | $2.24B$2.12B | +5.8% |
| Operating Income | $2.28B$2.14B | +6.5% |
| Net Income | $1.62B$1.62B | −0.2% |
| EPS (Basic) | $6.98$6.83 | +2.2% |
| EPS (Diluted) | $6.95$6.80 | +2.2% |
| Shares Outstanding (Basic) | 231.90M237.50M | −2.4% |
| Shares Outstanding (Diluted) | 232.80M238.60M | −2.4% |
05—Questions
Frequently Asked Questions
What were the main drivers of the sales increase in the third quarter of 2025?
The sales increase of 9% to $18.6 billion was primarily driven by higher product sales in Missiles and Fire Control (MFC) due to production ramp-up on key programs like PAC-3, JASSM, and LRASM, and increased sales in Aeronautics due to higher volume on production contracts for the F-35 program. Service sales also saw a significant increase, particularly in Aeronautics due to higher volume on sustainment contracts.
What is the impact of the program losses on the company's financial performance?
The company recognized significant program losses in the third quarter, including $950 million on a classified program in Aeronautics and $570 million on the Canadian Maritime Helicopter Program (CMHP) and $95 million on the Turkish Utility Helicopter Program (TUHP) in RMS. These losses, along with other unfavorable profit adjustments, negatively impacted segment operating profit and diluted earnings per share for the quarter and year-to-date periods.
How is the company managing its shareholder returns and capital structure?
Lockheed Martin continues to prioritize shareholder returns through dividends and share repurchases. In the nine months ended September 28, 2025, the company paid $2.3 billion in dividends and repurchased shares totaling $2.3 billion. Additionally, subsequent to the quarter, the Board of Directors authorized an increase of $2.0 billion to the share repurchase program, bringing the total authorization to $9.1 billion.
What is the outlook for future revenue given the company's backlog?
Lockheed Martin maintains a strong backlog of $179.1 billion, representing unfulfilled performance obligations. The company expects to recognize approximately 36% of this backlog over the next 12 months and 61% over the next 24 months, indicating strong revenue visibility for the foreseeable future.
06—Continue